It helps you to divide & allocate your monthly income in the most effective & updated way.
- Slight bit of Java (Also made this Web App for non-programmers).
- Monthly income. Lol.
So what is this Monthly Income Allocator? I will explain it in 4 parts to make things easier; Why, What, How and Who. First 1 thing to learn, What is Net Income?
Answer = Total Income (Salary, Money from your side business etc.) - All Expense (Food, Rent, Gifts to your girlfriend/boyfriend etc.)
I created this mainly for myself and all other busy guys & gals out there who are not so good at money management.
After researching a lot, I found one of the best ways to divide monthly net income and allocate it in places which can create wealth from money. But manually dividing and allocating it every month is really painful, so i wrote this code to automate atleast 40 to 50% of that process.
This code(calculator) takes your age and monthly net income into consideration and divides it into 3 funds. I call these funds:
- Safe Fund
- You Fund
- Risk Fund Let me explain.
(Very Safe + Liquid) fund.
After rounding your age to next nearest multiple of 10, that % is allocated in this fund. Let me give you an example; if you're 21, then the next nearest multiple of 10 is 30; so 30% of your total net income will be considered as Safe Fund. The more you grow older, amount of money allocated in the safe fund grows, thus reducing risk.
This fund is sub-divided into 2 parts:
- 70% of your Safe Fund, goes into your Savings Bank Account. This is (short term + very safe + highly liquid).
- 30% of it, goes into Public Provident Fund(PPF), Fixed Deposit(FD), Treasury bills(T-Bills), Bonds, Gold etc. This is (long term + safe + less liquid).
(Safe + Very Liquid) fund.
5% of your net income is allocated here. The more your income grows, more you can use it on 'yourself'.
This fund is sub-divided into 2 parts:
- 50% of this fund goes to yourself. By that i mean, invest in yourself. Buy courses, learn something new. Join a gym, take that meditation course, buy something to improve your health etc.
- And another 50% goes to your business or passion. If you love to make YouTube videos, upgrade your recording setup with this. Or if you are a blogger, buy a better Wordpress theme etc. In short, expand your business/passion.
(Very Risky + Liquid) fund.
This fund is basically; Total Net Income - (Safe Fund + You Fund). This fund gets lower as you grow older. As we all know it would be nonsense to heavily invest in Bitcoin when you're 89.
This fund is also sub-divided into 2 parts:
- 70% goes into long term investing in Stocks, Crypto, Startups, Mutual Funds etc.
- 30% goes into short term investment or trading or even increasing your cash reserve (obviously put your cash reserve in a bank account, don't keep it under your bed) etc. Now, if you're just into long term investing you can obviously do that by adding these two(70%+30%) and invest it.
I developed this fund allocation technique myself and will continue to develop/update it as i research further. I am nither a banker nor a wall street guy. I am just a guy who happens to read a lot. And obviously, this is not an investment advice. Do all your due diligence before doing anything with your money. But this particular technique helped me a lot, i hope it will help you too.