Financial Tips for Poor People in India

Okay, so you want to know the financial tips for poor people. You are at the right place. In this article, we will discuss about what all things a poor people in India or anywhere else must follow. This will ensure that you live a steady and peaceful life.

First of all let me tell you, being poor is just a state of mind. Anyone can be happy with whatever money they have. Most of the time we compare ourselves with the people around us. And that’s it! the problem starts from here, comparing ourselves with others. We may try to fit into the higher lifestyle even if we cannot afford it.

Financial Tips for Poor People

Start Saving and Investing

You must start saving out of your monthly income. Come what may you must save as you don’t know when will you need that saving at the later stage of the life. I know saving is difficult for you, but still find whatever ways you can save. So that you can cope up when more responsibility hits you up.

I have written a detailed article on how to save money. Use these hacks to save money. I am sure you will be able to find a few ways to save money. Start investing that saved money so that you will have some cushion and breathing space when some sudden expenses are crop up.

saving investing

There are many ways you can invest that money. It depends on your time horizon and risk appetite. I would suggest you to not to take the high risk of getting higher returns. As you cannot afford to lose that money at any cost.

Ideally, you should invest based on your life goals. These goals could be retirement, child’s education, buying a home etc. Goal-based investing will ensure that you are on the track of your financial planning.

Look for a Working Life Partner

It is good if both of you and your spouse are earning. It will give you more space and can fulfill your dreams. It is the best way to overcome any debt you have. Ideally, you should manage monthly expenses from one salary/income and from second income you can save or invest to fulfill your future dreams.

working life partner

Working spouse usually have the similar values and mutual sense of trust in each other. The spouse can create a source of support, safety and empathic understanding.

Your spouse is more likely to work and tend to feel more confident and productive as compared to the housewife. Give your spouse a chance to stand by you in the difficult time by giving him/her an opportunity to work.

If your spouse can’t go to work due to other commitments like family, children etc. Then there is good news for you. Nowadays, there are many ways you can earn from the home through online work from home jobs. These job are flexible in time so the one sitting at home can manage both the things at the same time.

Know Your Net Worth

It is important to know your net worth and keep a check on it. Make sure that you are not going overboard in taking any debt that you may not be able to pay off at later stage. Your net worth must be in line with your financial goals. You cannot have a financial goal when your net worth is going down.

net worth

To calculate your net worth, you just have to subtract the total liabilities from the total assets. Have a separate list for assets and liability. Make a total of them and then derive the figure by subtracting liabilities from the assets.

Here is a list of the items you should have in your assets side.

  • Money in your bank accounts
  • Value of your investment accounts
  • Your car
  • The market value of your home
  • Business interests
  • Personal property, such as jewelry, art, and furniture
  • Cash value of any insurance policies

Same way here is the list of the liability items.

  • Mortgage
  • Car loan
  • Credit card balance
  • Student loans

You must check your net worth at least once a year and compare it with the previous year’s number. You should be progressing in terms of this number.

You can use this net worth calculator to calculate your net worth.

Make a Budget

Another financial tips is to have a budget. Make a diary of monthly expenses and allocate money to each expense item. Make sure you don’t overspend on the monthly budget. Actually, your monthly budget must be designed in such a way that you will be able to save a few bucks at the end of the month.


Track all your expenses on a regular basis and check which are the expenses which you think can be avoided. Divide your expenses in two major category. Needs and Wants. Needs are the things that you have no way but to spend money on. While Wants are the things you can contemplate and avoid in certain cases.

Ideally, you must save 20% of your take-home income. It is a thumb rule, but if you are not able to save that much, it’s ok. Try to save as much as possible. Prioritize expenditures, first is groceries, then child education, then bills, then leisure. Follow 50/30/20 rule where:

  • 50 means: Needs
  • 30 means: Wants
  • 20 means: Savings

Calculate your after tax income and then apply the 50/30/20 rule of budgeting.

Try to limit your needs up to a maximum of 50% of your after-tax income. This must include, groceries, utility bills, housing, insurance, car payment and insurance (if any).

Then comes the next category, Wants! This includes clothing, new gadget, new vehicle etc. These are the things you want but are not necessary for you. So you should spend money wisely in this category.

And last comes the saving. Though it comes last, actually you should plan for saving in the first place. Save a minimum of 20% of your after-tax income. This will ensure your emergency fund is in place if you need them in any exigency.

Check Your Habits

Avoid wastage on smoking and alcohol as it not only empty your pocket, but also make your health worst. Smoking and alcohol not only kills you slowly but it kills your family as well.

No matter how you smoke, it is dangerous to your health. The cigarette is made from acetone, tar, nicotine, and carbon monoxide. It not only damage your lungs but also affect your entire body.

smoking addiction

I have seen many people smoking around 20 cigarettes a day. Imagine the damage it is doing to your body. Cost of one cigarette would be around Rs. 10, so if the person is consuming around 20 cigarette, the cost would be around Rs. 200 a day and Rs. 6000 a month. Now imagine if you can invest this Rs. 6000/month in mutual funds which will give you a decent returns of let say 15% a month. You can make a fortune by investing this amount in to mutual funds.

There is all the more reason you must not waste the money on the cigarette as you cannot afford it. But still, you are wasting your money on it as you are now habitual to this bad thing.

This should be one of the main financial tips to not to waste money on addictions which is not only harmful to your pocket but also to your health. Every month you can save this amount and invest which will fetch you a good amount after some years.

Another aspect of addiction is that you will have to pay a very high price for medical expenses at the later stage. So addiction is by far the most costly for poor people. It can consume 20% to 50% of your monthly income. Due to the addiction, your children may get a poor education and have to struggle throughout life. They may even start following you and become addicted just like you.

Many people living in poverty abuse substances to avoid their real problems. The cost of the cancer treatment is as high as Rs. 20 lakhs. Imagine the person who cannot afford this amount for the treatment. What is the way out for those people who cannot afford this high amount?

Impact of the addiction

  • Cost of buying cigarette and alcohol can disturb your home budget
  • Loss of productivity and income
  • It will drain you financially
  • Cost of healthcare would be unbearable
  • You need to pay a high insurance premium
  • The cost of addiction on society is unmeasurable

When you are living paycheck to paycheck and struggling to make ends meet, addiction can destroy you and your family.

Don’t Keep a Credit Card

A credit card caries a line of credit. You are allowed to borrow/use up to your credit limit. Credit card is the product recognised as a high risk product. If you miss the payment the repercussion is so bad that you cannot even imagine. The credit card companies are charging the interest as high as 36% to 40% yearly. Not only this, they levy a high penal for late payments or missed payments.

credit card

Once you are stuck in the vicious circle of a credit card, it becomes very difficult to come out of it. It is advisable not to use the credit card until it is the last thing you have.

As a poor middle class person, you may alway be in a need of the money. credit card comes very handy in such situation. But at the same time it is dangerous if you are not able to pay the bill on due date.

There is a very lucrative offer in all the credit card that you can pay only the “minimum amount” instead of full amount each month. which looks convenient but there is a catch that you will have to pay a heavy interest on the balance amount. And next month also you will not be able to pay the full amount so you will pay the minimum amount again.

This forms a revolving loan and you will be stuck up in the vicious circle of debt. This will also impact your CIBIL score adversely. There are various charges if you use the credit card in foreign. These charges are not clear to you at first.

Bonus Financial tips

  1. Having one child is good, another is a problem
  2. Your total EMI must not cross more than 15% of your take-home income
  3. Invest in yourself which help you to acquire new skills, find your skills and have a side income
  4. Bifurcate between needs and wants – Ask your self 5 Why
  5. Don’t get carried away with the people around you, avoid the tendency of the showing off.
  6. Take advantage of deals and discounts when going for shopping.
  7. Take good care of your health, you cannot afford to be casual, your family is dependent on you.
  8. Know the energy savings tips and save money on the electricity bill.
  9. Your savings should earn for you. Invest in instruments that generate passive income for you(FDs, Mutual Funds, Stocks, real estate etc.)\
  10. Do not fall in a trap of easy and quick returns, you may end up losing your money.
  11. Pay your existing debt as fast as possible, and don’t take any new liability.


Have peace of mind and stay away from the negative people around you. Focus on what is important for you and your family rather than comparing yourself with others.

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