5 golden personal finance rules to simplify your financial planning

As inflationary pressure eases and domestic investment regains traction, it is prudent to revisit five ‘rules of thumb’ reiterated by finance professionals to facilitate efficient financial planning. From estimating investment, growth to managing debt, these simple guidelines are proving invaluable.

5 key rules to simplify your financial planning
 

Rule of 72: Double your money with ease

The ‘Rule of 72’ provides a quick way to analyse and estimate how long an investment will take on an approximate basis to double in value. For the same you should just divide 72 by the annual return rate.

For example, at 8% annual return your money will double in roughly nine years. Now, in a post inflation world, nations CPI inflation hovered around 3-3.2% in April 2025. This rule can help investors understand and gauge real growth and counter erosion of value.

The “100 Minus Age” asset‑allocation guide

This formula is used to define the allocation of equities in your portfolio. It suggests that you should hold Equities = 100 - your age (%)with the rest of the remaining balance in debt. For example, a 30 year old investor would aim for a 70:30 equity to debt mix. Now it is a given that not one size fits all, it still provides a solid foundation for age based risk management and gives a fundamental view on long term investments.

The 40% EMI Rule: To keep debt in check

This rule simply means that your total EMI burden should not exceed 40% of your net monthly income. With rising home, auto, and personal loan rates, sticking to this cap ensures households avoid overleveraging and safeguard against financial stress.

For example, if your monthly salary is ₹1,00,000 then your total EMI outgo should not be more than ₹40,000 after covering all the heads such as home loan EMIs, personal loans, credit card bills along with other similar debt repayments.

Rule of  70 for inflation awareness

The ‘Rule of 70’ is the cousin of the ‘Rule of 72’, the Rule of 70 for inflation shows how quickly inflation halves purchasing power of an individual. At 7 per cent inflation, money’s value would halve in just 10 years (70 ÷ 7). Therefore, given nations' periodic spikes in food and fuel inflation, this rule provides a strict wake up call for individuals to manage their finances effectively and make inflation-beating investments.

Rule of  144: Quadruple your investment

Now to estimate when your investment will quadruple i.e., multiply by four times you should apply the ‘Rule of 144’ in this, you need to divide 144 by the annual yield to get to the desired figure.

For example, at 8% return, you can expect a four fold increase in 144/8 = 18 i.e., 18 years. This rule is relatively lesser known still it provides a longer term perspective on wealth accumulation.

Why do these rules matter now?

Hence, with the nation's inflation cooling off to 3% in May, the lowest figure in six years along with inflows into equity mutual funds dropping by 21.66% month on month to ₹19,013.12 crore, in such an environment retail investors must stay updated and informed on these rules.

Therefore, these five rules can assist investors to grow investments, allocate assets by age, manage debt efficiently, beat inflation and secure long term financial prosperity.

Disclaimer: This article is intended for informational purposes only and does not constitute financial advice. Readers are advised to consult a certified financial planner before making any financial or investment decisions.