Want to get an understanding of where I can improve with my budgeting

[allspiceberry143]

So, story time- I (26F) come from a middle class family with my past being mostly tumultuous financially due to my father’s poor financial decisions, which continued until I passed out of college.

The only thing that kept us alive and steady was my mother’s teaching job of 35k and our rent-controlled house (which my mother managed to buy off when it got converted into an apartment with her little PF payout).

In terms of assets, we have some gold and a flat (which I paid for partially by taking a home loan the moment I got a job), and some corpus from selling off the other rent-controlled flat that I mentioned earlier.

I don’t consider that corpus ‘mine’ as it is rightfully my parents’ and I would rather they secure their old age than splurge on me or my siblings. My mother, however, did gift me her remaining PF payout of ~₹6 lacs, which I invested immediately 2 years ago and it now stands at around ₹8 lacs.

With this context, coming to my budgeting- I earn ₹1.5 lacs post taxes now, where 20k goes to rent, 25k goes to home loan, ~₹20k I send to my parents every month for their expenses, 15k I save in an RD for 6-9 months to pay off their mediclaim premiums (the remaining months, I either save that or spend on needs that may arise end of the year), ₹20k I invest in SIPs, and ₹20k I save in cash to build an emergency fund for my parents (once emergency fund gets built upto 1 lac, I divert it to a travel fund for myself). The rest ~30k or so goes to groceries, outings with friends, a little bit of shopping for myself, or simply carrying forward the remaining cash for next month.

I have gotten ~5-6 lacs in bonuses till now from my 2 years of working, and 3 lacs I have kept in an FD, and the rest I am saving for my mom’s dental implants and my dad’s knee replacement.

I feel like I’m doing the best I can given my situation, but I can’t help but feel guilty for not doing enough for myself or my parents. I would really love an unbiased, outside view on this, and maybe some helpful advice as well.

Sorry for the long read, and thank you!

 

[gielleam]

@allspiceberry143 You've already done a lot! At this age, you have great financial acumen and forward thinking. I'd just add to get a health insurance policy for your parents. So you won't need to pay out of pocket for medical procedure.

 

[allspiceberry143]

@gielleam Thank you! The RD that I’m doing is paying for the health insurance… it’s just that some of these procedures are cosmetic in nature (like my mom’s dental one since she has neglected it her entire life so now it comes with a heavy premiums ), so will have to save separately for those.

But your response means a lot to me, so thank you again!

 

[reformedjen]

@allspiceberry143 You mentioned a 15k RD. How much are the health insurance premiums. You should be able to collect the amount in 4-5 months. What happens after that?

 

[allspiceberry143]

@reformedjen The premiums are usually around 90k (maybe 1 lac this year?) for my entire family (including siblings, as both of my parents are senior citizens and my dad is a smoker).

The 15k RD started from this year after I got a good hike, so haven’t really had the opportunity yet where I was saving an additional 15k after paying off the premium as till last year I was only putting 8k in a 12-month RD.

But for this year, I was either going to put this as a separate lumpsum investment once enough has been saved for the premiums, or give it to my mum since she wants a few renovations to be done around the house

 

[reformedjen]

@allspiceberry143 You're doing well, just 1 thing, during the next recession invest aggressively in equity. I did that in 2020 and now my portfolio is at a cool 43% return.

 

[allspiceberry143]

@reformedjen That’s the dream! Will definitely do that, thank you!

 

[gielleam]

@allspiceberry143 Ah ah! Sorry i missed that. You're an ideal child man.

 

[allspiceberry143]

@gielleam Faaar from it honestly, but thank you!

 

[epilla]

@allspiceberry143 You are already doing wonders. Maybe just maybe instead of that 30k (the one on groceries and outings and stuff ) spend 20k and take that extra 10k for another sip (if possible).

 

[allspiceberry143]

@epilla Yeah, woh thoda even I was considering, just need to figure out where to reduce that. It mostly goes to travel expenses for going to home or to my partner every other month

But thank you so much for taking the time to respond, I’ll realign a bit definitely!

 

[sarah_bo]

@allspiceberry143 Don't stretch it much. It's also the age to have some fun. Salaries will increase. Just be disciplined in investment.

 

[allspiceberry143]

@sarah_bo ‘You’re young, have fun’ bol bol ke maine kitne kharche justify kiye hai aur phir jo consequential guilt trip huye hai for treating myself lol still have some way to go to find the right balance without feeling the guilt, but thank you for lessening a little bit of that today with your comment!

 

[sweetpants]

@allspiceberry143 Respectable decision and good hold of your finances. Start me thoda thoda lagega but once you cross 15 years of service, I can easily see a portfolio in crores. Bas discipline yahi rehna chahiye.

 

[allspiceberry143]

@sweetpants Thank you for the reassurance! Mujhe half the time yehi lagta ki kuch build hoga bhi ya nai (I keep feeling that it’s not enough), but this really helps! Discipline toh bana rahega because I would kill myself with the guilt otherwise haha

 

[sebrinarinas]

@allspiceberry143 You are already doing a great job for your age and a little bit planning as advised above would do wonders. All I have to say is, that if and when you decide to marry, marry a man with your maturity levels when it comes to finances and who is comfortable with your family responsibilities. God bless!

 

[allspiceberry143]

@sebrinarinas Thank you so much for the assurance!
Definitely going to keep that marriage advice in mind!

 

[mike230]

@allspiceberry143 First off all, you’re doing great as it is, any suggestions I’m sharing below is mostly nitpicking.

• Given you are in a higher tax bracket, maybe the 3L FD can be invested somewhere else. Since you already have a emergency fund, you could transition it to equity. Or if you wanna have this as a safer investment, gold/arbitrage funds might make sense.

P.S. if your home loan interest is on the higher side it might make sense to pay more of it back.

• Same with the RD, i prefer arbitrage funds just coz of the tax. But this is not a big financial difference (just like 2% on a small amount).

 

[allspiceberry143]

@mike230 I definitely appreciate the nitpicking, that’s what I am actually here for , so, thank you for taking the time, really!

For the FD (and the RD), I would definitely want to have it as a safer investment. Probably not gold tho because I have seen my mum get hesitant about liquidating it when it’s really needed lol I had no idea about arbitrage funds so I’m definitely gonna read up on that, thank you!

As for the home loan, it did attract a whooping 9.5% last year but I shifted it to another bank and now it’s at 8.4%. I was thinking of sticking to this and paying it off (as only 8 years remain for that) while investing the lump sums since they usually give me atleast 12-13%, and the home loan does give me a good tax benefit and helps instil that discipline in me tbh

 

[mike230]

@allspiceberry143 Please do read up on arbitrage funds, i got to about them sometime back on reddit and they’re good.

At 8.4% home loan is pretty decent.

Another thing that came to my mind, have you invested in PPF?