I'm from India and earn in Indian Rupees. Should I do the math on my finances in USD?

The reason I ask this question is because INR lost value recently - quite a bit. So, for example, would it be beneficial to have a savings goal in terms of dollars and not Rupees (like 'save $150' irrespective of the INR/USD value).

PS: I'd just be tracking my money as USD - not actually converting it.

2 Answers 2


You goal should be in rupees, as you are earning in rupees and spending in rupees. Any other currency is of no value / meaning.

More than being worried about the USD/INR rate, you should be worried about inflation and savings rate. This will change the amount that you need to save for your retirement. The USD/INR rate would anyways get reflected into some of the prices of some of the items and would get relfected into Inflation.

Your savings goal should not be an arbitrary number. It should have a purpose. The purpose for saving goal could be to meet education in future, wedding, kids education, vacation, downpayment for house, retirement etc.

Say your goal is to save enough for you Masters degree that you plan to do after 3 years. Say As of today you find the cost fees/book/etc is Rs 100,000 for you Masters degree. Say Additional Rs 100,000 for your stay & food expenses.
So essentially you need to save Rs 200,000 in next 3 years. However here is the catch, in 3 years time the inflation around 10% may mean you need to save Rs 200,000 * 1.1 = 220,000 at the end of first year, and 220,000 * 1.1 = 242000 for second year, and 242,000 * 1.1 = 266,200. So essentially you need to save more. If you run this in XLS it will be easy to track and moniter. Now at the end of 1st year whatever you have saved, you may keep it in short term fixed deposits, this would get you interest. So effectively this calculation will tell you how much you need to save monthly.

For longer goals, you may say decide to invest the money in shares / PPF / or other instruments, the essential is same the returns that you are getting adds value and the inflation removes value.

  • So should I keep track of inflation rates and modify my goals as it changes? Jun 24, 2012 at 19:49
  • 2
    Aboslutely. Inflation and savings rate need to be constantly evaluated [atleast once a year]. You goal should factor these in. To being with you can just factor the normal inflation, but as you get hang of things, you should factor different inflations for different goals, ie education and Medical inflation is more than 25-35% in recent times.
    – Dheer
    Jun 25, 2012 at 7:12
  • I'm not sure how I'd factor in inflation. Just increase the 'original' goal by the inflation percent? Are there any keywords that I should search for on the Internet to get more information about this? Jun 25, 2012 at 20:07
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    Expanded the answer
    – Dheer
    Jun 26, 2012 at 4:56

If you earn Rupees, keep your money as Rupees, and spend the money on items denominated in Rupees, the dollar doesn't mean much to you any more than the Italian Lira means to me....

Do you mean to track as though they were dollars or actually convert as you earn the money?

rupee exchange rate

From X-rates, I looked at this chart. There's been a 10% swing in the exchange rate very recently. But going back, the years are not so volatile. Year 2000 ranged 43-46, so the volatility and drop in the rupee to over 50 is only recent. Has India experience inflation that concerns you? (disclaimer - I am slightly aware of the Euro in terms of dollar value, but not followed currencies for some time now)

  • Well Italy uses the euro so, the Lira is especially useless. Jun 24, 2012 at 3:02
  • I mean just track my money as if it were dollars - not actually converting them. Jun 24, 2012 at 3:09
  • My first line stands then. I don't see the value in this. If I were planning to move to a country with a different currency, I might want to start tracking that currency instead of my own, but I'm not seeing the point here. Jun 24, 2012 at 3:35
  • ^ Yes - there's been inflation and that is what I'm concerned about. Jun 24, 2012 at 18:48

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