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What You DO That Def... • 2m
Finance Concept – Budgeting Basics The Story of Aarav's Dream Journey Aarav was a 22-year-old with big dreams of starting his own café. He had a small savings account and a passion for coffee, but he didn’t know where to begin. One day, he decided to meet his mentor, Mr. Shah, who shared a roadmap to turn his dream into reality. Step 1: Budgeting for the Dream Mr. Shah explained the importance of budgeting. He said, "Aarav, your income is like the ingredients in a recipe—you need to use it wisely to create something great." He taught Aarav the 50/30/20 rule: 50% of his earnings for essentials like rent and groceries. 30% for lifestyle expenses like outings and hobbies. 20% for savings and investments. Aarav started tracking his expenses, cut unnecessary spending, and saved ₹5,000 every month. Slowly, his savings grew, giving him confidence to invest in his café dream. Step 2: Harnessing Compound Interest "Your savings alone won’t be enough," said Mr. Shah. "Let your money work for you through compound interest." He showed Aarav how investing ₹5,000 monthly in a mutual fund earning 10% annually could grow to ₹12 lakhs in 10 years. Aarav realized that starting early made a huge difference. He invested consistently, watching his money multiply, bringing him closer to his café fund. Step 3: Understanding Customer Lifetime Value (CLV) When Aarav finally opened his café, he wanted to attract as many customers as possible. Mr. Shah advised, "Don’t just focus on new customers. Focus on building relationships with existing ones. Happy customers will come back and bring friends." Aarav introduced a loyalty program—every fifth coffee was free. Customers loved it and kept coming back. Aarav calculated their Customer Lifetime Value (CLV): If a customer spent ₹200 per visit, came twice a month, and stayed loyal for 3 years, their CLV was ₹14,400. Aarav realized retaining loyal customers was more profitable than chasing new ones. Follow Our Medium blog for Finance and Business insights like this: https://medium.com/@FoundrBite
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