I had written this post in February 2012. However, given a lot of reader emails on topics covered herein, I am re-posting it.
I use a few rules of thumb when it comes to how I manage my personal finances. Here are some rules of thumb that I practice for managing my own personal finances. I hope you will find some of these useful for your own purpose.
1. Rule of 72. The Rule of 72 states that you can divide the number 72 by whatever yield you are getting to see how long it would take for your investment to double.
For instance, if your fixed deposit earns an annual interest of 8%, it will take 9 years for your money to double (72/8).
2. The number one rule of saving money is: Pay yourself first. It’s very important to set aside your savings every month before you use the money for other things, including paying of bills. Always pay yourself before anything else.