- A 26-year-old Indian professional earns Rs 85,000 monthly and invests Rs 35,000 in SIPs
- He saves over 40% of income but faces cash shortages during unexpected expenses
- Laptop repair and insurance renewal costs revealed lack of liquid funds despite assets
A high savings rate and a growing investment portfolio are often considered signs of responsible financial behaviour. For young professionals, regular contributions to mutual funds can seem like a straightforward route towards long-term wealth creation.
At the same time, a recent Reddit discussion involving a 26-year-old employee highlights why investment discipline needs to be accompanied by careful cash management. Living in a major Indian city, the individual earns Rs 85,000 a month and invests Rs 35,000 in equity-linked SIPs. The balance is used for rent, personal expenses and sending money to family.
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This allows the professional to retain more than 40% of their earnings through savings and investments. He considered this a considerable achievement, especially in contrast with peers who appeared to spend more freely on non-essential purchases.
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I earn ₹85,000/month, yet I ended up borrowing from a colleague last week. Here is where my "foolproof" savings plan went wrong.
by u/markhab_Insect_4727 in IndiaFinance
"I'm 26 make Rs 85,000 a month in a city and always thought I was good with money. Every month I put Rs 35,000 into equity SIPs. That left me enough for rent sending money home and basic things. I was proud. Saving than 40% of my income while everyone else spent without thinking," he wrote.
A sudden combination of expenses exposed a major gap in the individual's money management strategy. The laptop needed repairs worth Rs 14,000, and an insurance premium of Rs 11,000 was due for renewal.
Despite maintaining a regular investment schedule, he had very limited cash at hand. The account balance was down to Rs 3,200, making it difficult to accommodate the upcoming payments. A large share of the individual's earnings had been placed in fixed deposits and long-term investments, prioritising potential returns over the availability of funds for short-term requirements.
"Then my laptop screen cracked. Repair cost Rs 14,000. Around the same time, my annual insurance premium of Rs 11,000 came due. I opened my bank app. Saw only Rs 3,200 in cash. I had put everything into long-term investments and fixed deposits for returns. I had no money to handle sudden expenses," the post read.
The situation became particularly uncomfortable when the individual had to approach a colleague for a temporary loan of Rs 10,000. Despite having built up assets worth several lakhs, there was not enough money in the bank to cover routine expenses for the week.
The experience prompted the investor to reconsider their approach to managing money, recognising that a healthy investment portfolio does not necessarily translate into financial security.
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The viral post struck a chord within the r/IndiaFinance community, drawing several responses.
"Build a 3-to-6-month emergency fund in a liquid account before locking money into equity SIPs," wrote one user. "Just have some money in a savings account like 50,000. Like other suggested emergency funds for 3-6 months. Have a credit card for any bigger expenses as it provides with 30-45 days payment period," observed another person.
One comment read: "You need to prepare a monthly investment expense sheet and insurance or emergency fund it the thing to be planned well on time. First of the month, if you review your commitments, you will save yourself for life."
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