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April 2025

Essay

By Dhairya M. Thakkar, Chartered Accountant
Reading Time 4 mins

Editor’s Note : Tarang 2K25 – the 17th Jal ErachDastur CA Students’ Annual Day was held on 22nd February, 2025. The said event included an essay competition and the winning essay titled “The psychology of money: How financial decision shapes our lives” was penned by Dhairya M. Thakkar. Below is the verbatim print of the said essay

It is rightly said that, “Money is just a paper, but is never found in dustbin.” In simple words, from a popper to a multi-billionaire, everyone needs money to fulfill their needs, followed by comforts & desires.

Let us assume that there are 2 friends, Alex & Brian, who both earn Rs 1 Lakh per month. However, inspite of the assumption that everything between the 2 friends is same, the only difference is their choice of to spend money they earn. Alex chooses to purchase a few gifts for his family, uses money with a free-hand, shops a lot & hardly saves. On the other hand, Brian uses a simple yet effective rule which he names as “40-30-20 Rule”, i.e.-

40% of his income – For all the necessities, accommodation, etc.

30% of his income – Investing in stock markets, SIPs, Bonds, etc.

20% of his income – For all the additional luxuries,

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