First Job? Insure Yourself, Then Build A Crisis Fund

Queries

Ravi Kishore, 25

I have recently started earning. After my basic monthly expenses, I have very little left to save or invest. Should I prioritise saving, investing in mutual funds (MFs), health insurance or an emergency fund? How do I divide my salary?

At 25, your priority is not to maximise returns, but to build a financial foundation for consistent investing. A practical way to do it is to split of your income: 65-70 per cent for expenses, 10-15 per cent for the emergency fund and 5-10 per cent through systematic investment plan in a diversified equity mutual fund.

Your first priority should be to get a health insurance. If your employer provides one, check whether it is adequate and portable. Otherwise, buy a basic personal policy, as one hospitalisation can leave you in debt.

Next, build an emergency fund covering six months of essential expenses. Once you have saved the corpus, keep it in a liquid instrument separate from your investments.

Once these two are addressed, think of investing. As and when your income rises, direct much of every raise towards investments instead of lifestyle expenses. If saving 10-15 per cent seems difficult, then start with 5 per cent and increase gradually.

Col. Sanjeev Govila (retd), CEO, Hum Fauji Initiatives

Mansi Kapoor, 20 I am a student and a freelancer. In December 2025, I earned $950 as freelance income. Since then, I have earned more than $5,000, and I expect to earn $5,000 by March 2027. As I have never filed a return, what are my tax liabilities?

Filing an income tax return (ITR) is mandatory if your annual income exceeds Rs 4 lakh, under the new regime. Given your income, you are required to file an ITR. While a rebate is available for incomes up to Rs 12 lakh, this relief is only applicable if a return is filed. If you don’t file, you lose the benefit and may be liable to pay tax on the entire income.

Assuming your income is about $11,000 (about Rs 9 lakh), you should file ITR-3, declaring your income. You can claim expenses incurred for earning this income (software, internet, hardware depreciation, etc.) to reduce your taxable base. With the rebate, you would not owe tax, if you file the return.

If you still do not file your return, implications will follow. Non-filing can trigger income tax notices and attract a penalty of Rs 5,000. Further rebate is not available unless a return is filed. Hence, without filing, you may be required to pay tax on income exceeding Rs 4 lakh.

Vivek Jalan, Partner, Tax Connect Advisory Services, LLP

Amit SIngh, 27

I earn a decent salary but have limited savings. I want to buy a home, but arranging a 20 per cent down payment is difficult. Should I wait, or take a higher loan? How much of my income should go towards equated monthly instalments (EMIs)?

Buying your first home at 27 can be a good decision, but do not stretch your finances for the down payment. If 20 per cent down payment seem difficult, assess whether the property is affordable rather than taking a higher loan. A larger loan means higher EMIs and more interest over the loan tenure.

Ideally, keep EMIs under 30-35 per cent of your monthly in-hand salary. You can stretch this to 40 per cent if your income is stable. However, going beyond this can leave little room for other expenses or any other emergencies.

Make sure you have an emergency fund covering at least six months of essential expenses and EMIs, before you pay the downpayment. Also, account for stamp duty, registration, and other costs.

If saving 20 per cent takes another 12-24 months, waiting makes sense. If the EMI is affordable, a slightly higher loan can be considered.

Raoul Kapoor, Co-CEO, Andromeda Sales and Distribution