Important Thumb Rules of Finance

Rule Name
Rules
6 months car rule
Your car price shouldn't be more than your 6 months’ salary
Emergency fund rule
You should have up to 6 months of your salary as an emergency fund
Retirement rule
Whenever you have investments of 30 times of your current annual income, you can retire
First-year salary rule
You shouldn't take out more in student loans than you expect to make the first year on the job
Life cover rule
You should take term insurance worth 10 times your annual salary
House price rule
You shouldn't buy a home more than 5 times of your annual income. Loan EMI Shouldn’t be more than 40% of your monthly salary.
Diversification rule
No more than 10 mutual funds (Equity, Debt & Hybrid) in your portfolio

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