Setting a monthly amount that fits your budget

A question of budget, not a formula

Chapter 4 explained what a SIP is. This chapter looks at a different question: how do you think about choosing a monthly amount, without a one-size-fits-all number?

Picture pouring water into a cup. Pour too fast, or too much, and it spills over. Pour a careful amount, and the cup fills steadily without overflowing. Choosing a monthly investing amount works the same way — it should fit comfortably within what's left over, not strain what you need for everyday life.

Separating essential expenses from investable surplus

A simple starting point many people use is to first account for essential expenses — rent, utilities, food, debt payments, remittances — and only then look at what remains. That remaining amount, sometimes called surplus, is what could potentially go toward a SIP. This chapter isn't telling you what your own surplus is; that depends entirely on your personal situation.

Starting small and increasing over time

There's no rule that says a SIP amount has to stay fixed forever. Some investors start with a smaller monthly amount while they get comfortable with the process, then increase it later — for example, after a salary increase or once other expenses settle. The SIP calculator on this site lets you model an annual increase to your contribution, if you'd like to see how that might look in a projection.

Revisiting your number

A monthly amount chosen today doesn't need to be permanent. Life changes — a new job, a move, a change in family expenses — are all reasons some people revisit their contribution amount periodically. Chapter 17 covers this kind of annual review in more detail.

What to remember

Choosing a monthly SIP amount is a personal budgeting decision, not a formula this site can solve for you. A useful starting point is separating essential expenses from what's left over, starting at a comfortable level, and revisiting the number as your circumstances change.