Income, Expenses and Savings

1. Your money has a simple monthly flow

For most people, money follows a simple path: money comes in as income, money goes out as expenses, and whatever remains becomes savings.

If you earn ₹70,000 and spend ₹55,000 during the month, you have ₹15,000 left. That ₹15,000 is your savings for the month.

Visual: Your Monthly Money FlowIncome → Expenses → Savings

2. Income is money coming in

Income is money you receive. For an employee, the most obvious example is salary. But income can also come from a business, freelance work, rent, interest or other sources.

When planning your personal finances, use the amount you can actually use — usually your take-home income after payroll deductions — rather than only looking at your CTC or gross salary.

Visual: Where Income Can Come FromIncome is broader than salary.

3. Expenses are money going out

An expense is money you use to pay for something. Some expenses are predictable every month. Some change depending on how much you use. Others appear only once or twice a year.

Visual: Three Types of ExpensesUseful for planning instead of being surprised.

4. Savings is the part you keep

Mathematically, savings is simply income minus expenses. But relying only on “whatever is left at the end of the month” can make saving inconsistent.

A stronger habit is to decide your savings amount when income arrives, move that money aside, and then manage the remaining amount for expenses. People often call this paying yourself first.

Visual: Give Every Rupee a JobThe percentages are an example, not a rule.

In this example, ₹15,000 of a ₹70,000 take-home income is saved. The savings rate is approximately 21.4%. There is no universal percentage that everyone must follow — your responsibilities, debt, goals and income all matter.