What is MDI (Monthly Disposable Income)
Disposable income is the amount of net income a household or individual has available to invest, save, or spend after deducting all expenses including income taxes, debts, liabilities, food expense, school fee, transport expenses, rent etc.
The formula is:
SAVINGS: The surplus money left with us from all sources of income after all the expenses is called savings.
WHY to save: look at the picture below, it depicts our life cycle which goes through various expected and unexpected changes, incidents and events. Every incident or change brings financial burden and one need to be prepared to meet such expenses else they will have to borrow money and fall in the trap of debt.
INVESTMENT: When we save money and deploy that money in expectation that with time the money will give higher returns is called investment
DEBT: When our expenses are more than our income them we will have no savings and as a result in times of financial need we will borrow money from individual or institution, this creates debt
