If the salary is ₹ 1 lakh then what should be the EMI? If you ignore this formula you will become poor.

Do you start sweating every month as the EMI date approaches? Or do you feel that a large part of your hard-earned money is going only in bank installments? If yes, then believe me you are not alone. In today’s era of ostentation and convenience, taking personal loan for home, luxury car, iPhone and education loan for children’s education has become so common that we often forget our financial capacity. According to finance experts, if a large part of your salary is going towards EMI, then you are not fulfilling your dreams but are pushing yourself into the quagmire of debt.

What is EMI’s ‘Golden Rule’?

Most financial planners and lending institutions insist on a basic rule, which is “40% EMI Rule” It is said. According to this rule, all your EMIs (home loan, car loan, personal loan and credit card payments) should not be more than 30 to 40 percent of your total monthly income (Net Salary). However, if you live in a big city where child fees and medical expenses are high, experts recommend Only 30% will get their Lakshman Rekha Understand.

Understand mathematics on salary of ₹ 1 lakh

If your in-hand salary is ₹1 lakh per month, then according to experts your budget should look like this:

• Safe Rule of 30%: All your EMIs in total ₹30,000 Should be around. This is the safest position.
• Maximum limit of 40%: Your EMI ₹40,000 Can go up to, but it can be a bit risky. If your EMI is more than this, your home budget may get shaken.

The simple objective of this formula is that even after paying the EMI, you still have enough money left for ration, household expenses, emergency fund and future savings.

Danger of having high EMI

According to financial planner Akhilesh Mishra, as the ratio of your income to EMI increases, your financial freedom starts decreasing. When EMI crosses 50% of the salary, many problems can start:

• Sudden small medical expenses or emergencies also start stressing you.
• It becomes impossible to invest for retirement or future planning for children.
• If there are any ups and downs in the job, there is a risk of installments defaulting, which may damage your CIBIL score.

Keep these things in mind before taking a loan

Banks are often ready to give loan up to 50% of your salary, but that is their maximum limit, not your security. How to choose the right EMI stability of income Must see. If your income is freelance or commission based, then it is wise to keep the EMI within 25%. Apart from this, before taking any big loan, you should have Emergency fund equal to 3 to 6 months’ expenses Must be ready.

While taking a loan, do not just look at the EMI figures, but also carefully understand the interest rate, processing fees and pre-payment rules. Remember, longer loan tenure reduces the EMI, but you end up paying a huge amount as interest to the bank. Experts believe that “Right EMI” It is only that which you can comfortably pay for a long time without any mental stress, even if inflation or household expenses increase in the future.