Radhika Gupta, the MD and CEO of Edelweiss Mutual Fund, has written a book titled “Mango Millionaire” that offers a fresh perspective on saving money. Gupta compares saving to a cricket net practice, where the discipline built at the beginning sets the stage for successful investing later. She introduces the 10-30-50 rule, a step-by-step framework to build lifelong wealth. The rule recommends saving 10% of income in one’s twenties, 30% in one’s thirties and forties, and 50% after forty.
Gupta advises young professionals to start small, even with just 1% of their income, and gradually increase their savings over time. She acknowledges the challenges faced by young professionals, including lower salary packages and the desire to enjoy lifestyle amenities. However, she emphasizes the importance of starting early and being consistent.
As individuals enter their thirties and forties, Gupta recommends increasing their savings to at least 30% of their income. This is a time when career growth and promotions can lead to increased earnings, making it easier to save more. Finally, in one’s forties and beyond, Gupta suggests saving at least 50% of income, as this is typically a time when earnings peak and expenses such as children’s education and retirement planning become more significant.
Gupta also proposes a Savings Deducted at Source (SDS) model, inspired by the Tax Deducted at Source (TDS) system. This model would involve automating savings deductions, making it more difficult to bypass saving. She stresses that the key to wealth creation is habit, not just the percentage of savings. “Savings is a habit-driven approach,” she says. “Initially, forming the habit of saving is more important than the percentage of money you save.”
Overall, Gupta’s approach to saving and investing emphasizes the importance of discipline, consistency, and habit. By starting early, increasing savings over time, and making savings a priority, individuals can set themselves up for long-term financial success. As Gupta notes, “No investor can hope to succeed without first mastering the art of saving.” By following the 10-30-50 rule and adopting a habit-driven approach to saving, individuals can build a strong foundation for wealth creation and achieve their financial goals.