With Rs 2.5 lakh monthly outflow, how can I optimise my mix of EMIs, SIPs, savings?

I’m trying to be more intentional with money. I earn enough to cover expenses and savings, but I’m curious if I can be smarter by learning from others. My monthly outflow is around Rs 2.5 lakh — Rs 65,000 on a home loan, Rs 18,000 car EMI, Rs 50,000 in SIPs, Rs 20,000 toward an emergency fund, Rs 12,000 on pet care, and usual spends on groceries, utilities, and lifestyle. I’d love to understand how others approach their finances: Do you use fixed ratios or flexible buckets? Any mental frameworks or systems that work for you? And what’s one financial habit you wish you’d adopted earlier in your journey?

Advice by Akhil Rathi, Head – Financial Advisory at 1 Finance

Cashflow planning is a very important component of financial planning, yet many tend to ignore it because it appears to be a simple matter of inflow and outflow. However, managing outflows effectively requires a clear understanding of needs versus wants, as well as awareness of one’s own financial behaviour. There are various thumb rules such as 50:30:20 or 60:40, but the right approach depends on individual lifestyle and life stage, which can change over time.

Spending behaviour plays a critical role; if it is high, particularly on wants, it will directly impact the ability to invest. Key ratios such as Expense-to-Income and Investment-to-Income are important from a financial planning perspective. It is equally essential to evaluate whether an expense is truly necessary. SIPs should not be treated as expenses, as they build investments, and EMIs should not be seen as expenses when they help reduce debt and create assets.

In practice, effective cashflow planning also means anticipating irregular or seasonal expenses — such as insurance premiums, travel, or festival spending — and setting aside funds in advance. Building this foresight into your plan prevents sudden cash crunches and avoids reliance on high-interest credit. It’s also wise to periodically review your cashflow to adapt to income changes, life events, or evolving financial goals.

Cashflow planning is not about restricting spending, but about directing it with purpose. When every rupee is assigned a clear role, whether for living needs, asset building, or future goals, you create a system where money consistently supports your priorities. This clarity not only improves financial outcomes but also reduces stress, as you gain control over both short-term needs and long-term aspirations.