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PERSONAL
FINANCIAL
MANAGEMENT
CHALLENGES AND OPPORTUNITIES
Vinay PatilVinay RVinay Kayasth
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DEFINITION
Personal finance:the process of
planning your spending, financing, and
investing so as to optimize your
financial situation
Personal financial plan:a plan that
specifies your financial goals anddescribes the spending, financing, and
investing plans that are intended to
achieve those goals
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CREATING AND MANAGING
A BUDGET: KNOW YOUR
HABITS
First, know your
habits by tracking
your expensesto fully understand
how you spend
your money
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CREATING AND MANAGING
A BUDGET: MONITOR YOUR BUDGET
Commit to your budget
Track and compare actual expenses
against monthly budget
Make choices to reduce expenses
Start saving for your short and
long-term needs
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The case of Mr Ramesh and Suresh
RAMESH SURESHMonthly Income : Rs 50000 Monthly Income : Rs 50000
EXPENSES:
Monthly rent : Rs 15000
Food : Rs 12000
Credit card : Rs 8000
Miscellaneous exp : Rs 12000
(Fuel, bills, partying,etc)
EXPENSES:
Monthly rent : Rs 8000
Food : Rs 7000Miscellaneous exp : Rs 10000
(Fuel, shopping, bills,etc)
SAVINGS: Rs 3000 SAVINGS: Rs 25000
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CREATING AND
MANAGINGA BUDGET:
WANTS V NEEDS
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OPPORTUNITIES
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INCOMETake-home pay minus taxes,
social security, health insurance,401K
SAMPLE BUDGET
Based on 60% solution from msn.Money
FIXED EXPENSES: 60%Rent/Mortgage, Utilities, Home/Cell
phone, Commuting, Car payment,
Insurance, Work-related (clothes, dry-
cleaning), Student Loan Payments,Credit Card PaymentsSAVINGS: 20%
Money set aside for vacations, major
repairs, new appliances, to pay down
existing debt, emergenciesa down-payment on a car or house,
charity
RETIREMENT: 10%
Ideally, 10% of your gross incomeJUST FOR FUN: 10%
Everybody needs some fun
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Where can I save or invest
my money?Types of Accounts: Saving and Investing
Savings Accounts
Certificates of Deposits (CD)
Stocks and Bonds
Real Estate
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POWER OF COMPOUNDING:
START SAVING NOW!
SAVING Rs 50 A DAY AMOUNT YOU PUTIN ACTUAL WORTH*
Year 5 Rs 91250 Rs 100650Year 10 Rs 182500 Rs 229550Year 20 Rs 365000 Rs 603450Year 30 Rs 547500 Rs 1212500
*Assumes Rs 18250 is deposited at the end of each year for the # of years listed. Return is compounded annually. Above amounts are pre-tax.
Benjamin Franklin said: "If you know how to spend less than you
get, you have the philosopher's stone."
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CHALLENGESTOPERSONAL
FINANCING
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FINANCIAL MANAGEMENT
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CREDIT CARDS
Although credit cards may
seem like your ticket to buy
anything you want but it isimportant to
understand just how much
that little piece of plastic
could really cost you
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HOWTHEINTERNETFACILITATESFINANCIALPLANNING
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INTEGRATINGKEYCONCEPTS
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THANK
YOU