How Much of Your Salary Should You Invest Every Month?
One of the most frequent dilemmas for salaried individuals is figuring out the exact percentage of income that should go toward investments. Financial influencers often quote the "50/30/20 Rule," but for an everyday Indian household managing rent and EMIs, rigid formulas often fail.
Deconstructing the 50/30/20 Guideline
50% Needs: Groceries, utility bills, rent, children's school fees, basic EMIs.
30% Wants: Dining out, weekend trips, gadgets, shopping.
20% Savings & Investments: Mutual funds, PPF, emergency funds.
While 20% is a solid minimum benchmark, it treats someone earning ₹30,000 and someone earning ₹2,00,000 the same way.
A Practical Indian Framework: The Tiered Approach
Your savings rate should scale as your income grows, not stay locked at 20%:
Early Career / Entry Salary (₹25,000 to ₹40,000): Fixed costs are high relative to income. Target 10% to 15% (₹3,000 to ₹5,000). Focus on building the habit and setting up an emergency fund.
Mid-Career (₹50,000 to ₹1,00,000): Your income covers baseline living expenses comfortably. Target 25% to 35% into long-term wealth assets.
Established Earner (Above ₹1.5 Lakh): Beware of "lifestyle inflation"—upgrading cars and apartments just because your salary rose. Target 40% to 50%+ towards aggressive investing.
The Golden Rule of Execution
Most people follow this broken formula: Income - Expenses = Savings
Flip the above equation completely: Income - Investments = Expenses
On salary day, schedule your SIP auto-debits for the 3rd or 5th of the month. Force yourself to live on whatever remains. What isn't visible in your primary account doesn't get spent.
Nikunjj Jhawar is a Chartered Accountant (CA) and Chartered Financial Analyst (CFA) with nearly two decades of experience in the financial services industry. Having worked with global institutions such as HSBC and Credit Suisse in investment-related roles, he brings deep expertise in finance and markets. He is the Founder of mangopeoplenews.com, where he focuses on making complex topics in finance, markets and business accessible and relevant to everyday readers.
