Finance Concept ā Budgeting Basics The Story of Aarav's Dream Journey Aarav was a 22-year-old with big dreams of starting his own cafĆ©. He had a small savings account and a passion for coffee, but he didnāt 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 recipeāyou 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 ā¹5,000 every month. Slowly, his savings grew, giving him confidence to invest in his cafĆ© dream. Step 2: Harnessing Compound Interest "Your savings alone wonāt be enough," said Mr. Shah. "Let your money work for you through compound interest." He showed Aarav how investing ā¹5,000 monthly in a mutual fund earning 10% annually could grow to ā¹12 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 cafĆ© fund. Step 3: Understanding Customer Lifetime Value (CLV) When Aarav finally opened his cafĆ©, he wanted to attract as many customers as possible. Mr. Shah advised, "Donāt just focus on new customers. Focus on building relationships with existing ones. Happy customers will come back and bring friends." Aarav introduced a loyalty programāevery fifth coffee was free. Customers loved it and kept coming back. Aarav calculated their Customer Lifetime Value (CLV): If a customer spent ā¹200 per visit, came twice a month, and stayed loyal for 3 years, their CLV was ā¹14,400. 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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