Financial Freedom: If you earn Rs 1 lakh and still remain trapped in debt, then keep these 5 mantras in mind..

Nowadays, earning ₹1 lakh per month is considered a good income, but even in big cities, this money quickly runs out. In fact, many people get into debt due to spending on rent, food, and entertainment. So, if you earn ₹1 lakh and still find yourself in debt, it could be due to your lifestyle and spending habits. But don't worry, with a few simple steps, you can spend less, save more, and achieve financial freedom.

Why do people get into debt even after earning ₹1 lakh?

A salary of ₹1 lakh is good, but rent, food, and lifestyle costs are very high in big cities. For example, the rent for a 1 BHK in Mumbai or Delhi can cost ₹30,000-₹50,000. Furthermore, expenses like dining out, online shopping, and EMIs eat into your earnings. Therefore, if you spend more than ₹1 lakh, you have to take out a loan, and this debt gradually increases.

Learn and understand 5 easy ways to spend less
1. Create a budget

What to do:
Every month, write down your income and expenses and follow the 50-30-20 rule.

50% for essential expenses (rent, electricity, groceries).
30% for desires (food, entertainment).
20% for savings and investments.
Benefit:
This will help you understand where your money is going and reduce unnecessary expenses.
Example:
If your salary is ₹100,000, allocate ₹50,000 for essentials, ₹30,000 for desires, and ₹20,000 for savings.

2. Reduce eating out and online shopping
What to do:
Stop eating out frequently, ordering online, or buying unnecessary clothes and gadgets. Cook at home and wait for sales.

Benefit:
You can save ₹5,000-₹10,000 a month.
Example:
Instead of ordering from Swiggy/Zomato, eat home-cooked food once a week.

3. Reduce EMI and credit card usage
What to do:
Avoid credit card purchases and EMIs. Save money for essential items first, then buy.
Disadvantage:
EMIs and credit card interest increase your debt.
Example:
If you live a lifestyle of ₹1.2 lakh but earn ₹1 lakh, your debt will increase by ₹20,000 per month.

4. Develop the habit of small savings
What to do:
Focus on small expenses, such as coffee, taxis, or subscriptions (Netflix, Amazon Prime). If not needed, cut them off.
Benefit:
Small savings can save ₹2,000-₹5,000 per month.
Example:
Instead of drinking a ₹100 coffee every day, make it at home; this can save ₹36,000 a year.

5. Build an Emergency Fund
What to do:
Deposit ₹5,000-₹10,000 every month into an emergency fund, keeping it in a liquid mutual fund or savings account.
Benefit:
You won't need to take out a loan in case of job loss or a medical emergency.
Example:
Build an emergency fund for 6 months' expenses (approximately ₹3-₹4 lakh).

More Savings and Investment Ways
1. Invest in SIPs
So, if you save ₹20,000 every month, invest it in mutual funds through a SIP. For example, a ₹20,000 monthly SIP (12% return) can generate ₹4.4 million in 10 years and nearly ₹1 crore in 15 years. You can start this through online apps.

2. Save Tax
Invest in PPF, ELSS mutual funds, or NPS to save tax. Yes, this will provide a tax deduction of up to ₹1.5 lakh under Section 80C, which means your savings will increase as you save tax.

3. Keep your lifestyle simple
Avoid EMIs on expensive phones, clothes, or cars. Live in a cheaper home and use public transport. A simple lifestyle can save you ₹10,000-₹20,000 per month.

What is financial freedom, and how can you achieve it?
Financial freedom means having enough money so that you don't need to borrow money and can meet your needs without stress. To do this:
Eliminate debt:
Pay off credit card or loan EMIs first.
Increase investments:
Invest your savings in SIPs, PPF, or FDs.
Increase income:
Increase your income by working part-time, freelancing, or learning a skill.

Always keep a few important things in mind:
Follow your budget:
Keep track of your monthly expenses and savings.
Use credit cards sparingly:
Use cash or debit cards to avoid interest.
Investment risks:
SIPs involve market risk, so choose a good fund.
Advice from an advisor:

Consult a financial advisor before investing.

So, it's clear that getting into debt, even with a salary of ₹1 lakh, is common, but with proper planning, you can turn it around in time. Yes, with a little caution and regular savings, you can achieve financial freedom. (Note: This news is based on general information.)

Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.