Personal Finance Management: Navigating the Money Maze

In the digital age, we often receive thought-provoking messages, sparking positivity, yet there are those anxiety-inducing messages, particularly for salaried individuals, reminding them of upcoming EMIs.

Personal Finance Management: Navigating the Money Maze

In the digital age, we often receive thought-provoking messages, sparking positivity, yet there are those anxiety-inducing messages, particularly for salaried individuals, reminding them of upcoming EMIs.

Personal Finance Management

Our Daily Toil

We work tirelessly every day, week, and month, but managing our finances, the process that defines our monetary well-being, often eludes us, leading to financial confusion and loss. The inflow into our bank accounts may be consistent, but our outflows vary widely, resulting in an unsettling financial imbalance.

Financial Rules?

Warren Buffet’s sage advice is clear: “The first rule of investment is don’t lose money,” with the second being “Don’t forget the first rule.” Countless authors have crafted rules and techniques for personal finance, with the 50/30/20 budgeting rule by Elizabeth Warren gaining popularity.

The 50/30/20 Rule of Budgeting

This budgeting rule is as simple as the title says,

  • Set 50% of your income aside to cater to your monthly “needs” like rent, EMI, fees, electricity, fuel, etc.
  • Set 30% apart to enjoy your “wants.” This includes entertainment, clothes, luxury buys, etc.
  • Set 20% aside for “investments” and “loans” that will help you reach your financial goals and pay off your EMI of loans as well.


A simple theory applies here, one size does not fit all, and this budgeting rule may not work equally well for everyone. It’s a valuable starting point, but individual circumstances, income, and goals must be considered.

Tools for Financial Management

Personal Finance Management (PFMs) tools help manage money more efficiently. They give you a holistic view of your overall financial situation, by tracking inflows, outflows and net cash position.

Benefits of Personal Finance Management (PFM) Tools

  1. To get a comprehensive insights of your financial behavior.
  2. Attract new opportunities effortlessly.
  3. Seamlessly integrate digital and financial experiences.
  4. Enjoy peak comfort.
Examples of Real PFM Tools: Consider tools like BBVA, Metro Bank, Santander, and Fintonic for a more efficient financial journey.

Embracing Financial Literacy

Relationship with money is as important as managing our funds. This gives rise to a new and essential concept – Financial literacy.

Simply put, “Financial literacy is the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing”.

Enhanced financial literacy supports saving for education, retirement, responsible debt management, and successful entrepreneurship.

Key Steps to Attain Financial Literacy

  1. Create a budget.
  2. Track expenses.
  3. Manage debts.
  4. Plan for retirement.

Where to begin? As top financial experts advice: ‘plan comprehensively’.

A Comprehensive Financial Plan

Begin by assessing your income, strengths, limitations, and assumptions, as these factors are unique to each individual. Understanding them provides a roadmap for your financial journey.

Asset Classes:

Divide all your assets into asset classes and establish an appropriate weightage for every asset class.

Projected Annual Return:

Figure out the projected annual return for every asset class. This will help you in analysing and decision making.

Projected Annual Standard Deviation:

Assess how returns may deviate from initial plans.

Risks (Inherent):

Inherent risks are unavoidable but mere awareness about them would help keep your investments on track.

Risks (Controllable):

All risks other than inherent risks can be controlled, considering that they can be caused by market, technology and various other factors.


The timing of your investment, i.e., when you choose to invest and how long you choose to invest for, needs to be given weightage.

Macro Factors:

The macro-economic factors can really influence our stock prices, shares, intra day transactions, sale value, resale value etc.


Sensitivity analysis involves calculating various asset classes with varied and different assumptions throughout the year.

Confidence Levels:

Establishing confidence levels marks the level of probability that is expected and is likely to happen for the year.

Retirement Plan:

Planning your retirement during your early times of career, might help you track and analyse your yearly savings and tenure.

Risk Management:

Managing various risks in terms of strategy and income planning is required.

Investment Policy:

The policies in terms of years required, amount of investment and rate of return might differ for every asset class and for every asset management company.


Every individual engages in personal financial management to some degree. Striking a balance between income, expenses, savings, and investments is key to optimizing personal financial planning and management. As Tim Maurer suggests, “Personal finance is more personal than finance.”

Latha Velmurugan R V
Latha Velmurugan R V


Author Bio

Latha, a Chartered Accountant and commerce graduate, embarked on her journey with L&T in October 2022, specialising in DC – Treasury. Her current role involves managing the working capital of L&T Construction. She is committed to establishing herself in the field of finance and actively seeks opportunities to enhance her knowledge and expertise. Alongside her financial pursuits, Latha is a fervent writer with a presence on LinkedIn, exploring diverse writing genres. Her passion for fiction books and fascination with learning new languages adds depth to her interests.

Disclaimer: The information, statements and opinions contained in this content are of a general nature only and do not take into account your individual circumstances including any laws, policies, procedures or practices you or your employer or businesses may have or be subject to. Although the statements of fact on this page have been obtained from and are based upon sources that L&T EduTech believes to be reliable, it does not guarantee their accuracy or completeness.