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LEARNING
Session1
MoneyMatters:Theyreallymatter!
ActivityI
LEARNING
TheinformationfurnishedbelowisofMr.PawarYouneedtocalculatethenetworthofMr.Pawarbyidentifying theitemsasassetsorliabilities:
SpeakingMoneywise:You areworthyourNetworth
ITEM Savingsbankaccountbalance Sharesoflistedcompanies Car House Furniture AirConditioner Microwave Laptop GoldJewelry LifeInsuranceSurrenderValue CarLoanOutstanding HomeLoanOutstanding Moneylendtoafriend Paymenttomaidnotpaid TotalAssets TotalLiabilities
Amount(Rs.) AMOUNT(Rs.) 55,000 60,000 3,25,000 25,00,000 12,500 14,000 10,500 22,000 75,000 85,000 2,00,100 12,00,000 15,000 1,500
Asset ASSET
LIABILITY
Networth=TotalAssetsTotalLiabilities NetworthofMr.PawarisRs.
LEARNING
Planning:TheMantraofSuccess!
WeallhaveGoalsinlife:
IwanttobuyacricketBat
Iwanttogotopicnic
Iwanttobuyacycle
Iwanttogetadmissionin ABCCollege
SMART
LetsseethedifferencebetweenwhatisSmartandwhatisnot:
LEARNING
ActivityIII:
Belowarethegoalsofsomesmartkidslikeyou.NowyourtaskistoplanaSMARTgoalforeachoneofthemso thattheycanachievetheirgoals:
SMARTgoal:
ING
Session2
5
Budgeting:Prioritizingtheneeds!
Win Win
Win Win
AlltheWay
ActivityIV:
Mr.andMrs.Singhhavefollowingfamilydemandstomeet:
Discuss the demands and prioritize them on the basis of importance and urgency. Thentakerequired action:
Urgent
I.Urgentandimportantaswell Action:Needtodonow
NotUrgent
II.Importantbutnoturgent Action:Plantodoitlater
NotImportant
Urgent Y N N Y N
Important Y Y N N N
Remember
Needsarebasicnecessitiesonecannotwishaway.Forexampleinsummerfanbecomesaneed. Ontheotherhandwantsmakeyourlifecomfortable.Anairconditionermakeslifemorecomfortablein summer.
LEARNING
Budgeting:LetsfirstlearnfewtermsaboutBudgeting
CashflowStatement:
Budget: income
NecessityofBudget:
Optimizesavings TrafficsignalforvehiclecalledSpending. Saveaccuratelyforaparticularshort/longtermgoal. Effectivelyallotfundstovariousareasofexpenditureinadvance. Projectedincome>ProjectedExpenditure=Budgetsurplus Projectedincome<ProjectedExpenditure=Budgetdeficit Let go something now for something better/bigger in the future. Eg: giving uptheideatobuyvideogamenowtopurchaseabicycleinthefuture. Instantly buy something when you want it. Eg: Purchase a video game instantlywhenyouwantit. Atapointoftime,whenyougive upsomethingto achievesomethingelse, the forgone opportunity is known as Opportunity Cost. Eg. You have an option toeither buy a video game ora bicycle and you opt for the bicycle, thenthevideogameistheopportunitycostforpurchasingbicycle. is an advantage for children: Art of budgeting helps a person develop economicwayofthinkingandproblemsolving
BudgetSurplusorDeficit:
PostponingSatisfaction:
InstantSatisfaction:
OpportunityCost:
Knowledgeofbudgeting
LEARNING
HewantstogiveadresstohissisterwhichcostsRs.600whichheunabletofindanywaytogetmoneytobuy it.CanyouhelpHimanshutoattainhisgoal???
WhatshouldbeHimanshusSMARTgoal?
Analyzetheneeds/wantsofHimanshu:
PlanningandreworkingonHimanshusbudget:
LEARNING
ActivityVII Jai is a 14 year old boy who resides in Pune with his family. His family consists of four members, his father,mother, younger sister and himself. One day he along with his younger sisterDisha decided to go for a familytrip to Manali. When he discussed their desire to his parents, they liked the idea but kept itinthebackseatasthereweresomeurgentneedsthatweresupposedtobefulfilledintheyear. Understanding the problem of his parents, he decided to save money from household expenses and planthetripwiththesavings.Hediscussedthisstrategywithhisparentsandtheywereveryhappyand appreciatedthisaptdecisionoftheirwiseson.Theyalso promised to spare Rs.15000 for the trip. Rest was dependent on the savings. The plan for the trip was 6months from now. Jai enquired about the expenses of the tripand came to know that total trip will costapproximately Rs.30000. He collected the details of monthly expenditure offamily in a chart along with theadditionaldetailswhichareas follows: EveryS u n d a y ,f a m i l y g o e s f o r a n o u t i n g . Theyw a t c h m o v i e i n t h e t h e a t r e w h i c h c o s t s them Rs.150/person. AftermovietheygoforalongdrivewhichcoststhemRs.300/Sunday.Dinnerinarestaurant whichcoststhemRs.550/Sunday. HisfatheruseshiscartocommutetohisofficewhichcoststhemRs.150/day.Hisfatheralso possessesa BikewhichwhenusedtocommutetoofficewillcostthemRs.50/day.Heworks22daysa month.
AreaofExpenditure Medical&emergency Reserve Electricitybill Phonebill Movie&Popcornat Multiplex Dinneratarestaurant Longdriveexpenses Grocery Fathersdieselcharges Misc Total ExpectedSaving TotalSaving
Scopeforcurbing
Proposed saving
Savingsin6 months
5500 800
LEARNING LEARNING
Activity:VIII
Prepareyourfamilysmonthlybudget&findoutmonthlysurplus/deficit
AreaofExpenditure
CurrentExpenditure/month
TotalIncome IncomeExpenses=Surplus/Deficit=
______________________
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LEARNING
Session3 Investments
Keepyourmoneysafeandmakeitwork!!!
Onceuponatimeatabank:
WhatisthisextraRs.10thatBankerisofferingtoAnkush?
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LEARNING
Activity:IX
RealBankVs.PiggyBank:Letscomparethemon3crucialfeatures:
Writedownatleastthreedifferentavenuesofinvestmentyoucanthinkof: 1. 2. 3.
Banking:
ButwhatisaBank? Bank is an institution where people park their surplus money (Deposit) and earn some return called interest. At the same time people who need money can borrow from bank for a cost (again interest).Therefore bank is an institution involved in the business of borrowing and lending money. It charges higher rates of interest while lending and pays lesser interest to depositors. The difference betweenlendingandborrowingrateiscalleditsNetinterestmargin(NIM)
ForanycountrybanksplayavitalroleforthefinancialneedsofIndividualsandcompanies,enablingsmooth Economicactivity
TypesofbankAccounts: Savings Account: It is useful for depositing your surplus money and withdrawing money needed for expenses.Oneneedstokeepaminimumbalanceusually.Bankspaylowestinterestrateonthemoneykept inthisaccount.
CurrentAccount: Thisaccount isforbasically business transactions.Banksdo not pay any interestonthe moneykeptinthisaccount.
Termdepositaccountorfixeddepositamount:Asthenamesuggestsinthisaccountmoneyisdeposited forafixed andpredetermined term.One deposits money which is not required immediately in this account. Interestrateishigherthansavingsaccount.
Activity:X
1. WhatisATM?
2. Whatisacheque?
3. WhatisaDemanddraft?
4. ebanking? 12
LEARNING
Session4
INVESTMENTMANTRAS 1. Timevalueofmoney
Sunny:
Bobby:
Given:Bothearn15%perannumreturnontheirinvestment.
Whodoyouthinkwillhaveaccumulatedmorewealthattheageof35?
Whatdidyouunderstandfromtheabove?
2. Whatistheeighthwonderoftheworld? Once upon atimetherelivedawealthyking.Hewasreveredforhisintelligenceand asatrue patron of Innovation. Onedayaman broughttohima newboard gamethatthe manhad invented. Hecalled thegamechess.Thekingplayedthegamewiththemanandhewassoimpressedthatheaskedhim tochoosearewardforhimself.Themanaskedforoneashrafi(goldcoin)forthefirstsquareofthe chessboard,2ashrafisforthesecond,4forthethird,8forthefourthandsoonforallthe64squares onthechessboard.
LEARNING
Thestoryunderlinestheconceptof Whatdidyouunderstandfromthis?
3. Howmanyyearsaregoodenough!Whatrateisgoodenough?
ThetablebelowshowsyouhowasingleinvestmentofRs.500willgrowatvariousratesofinterest.
Years 1 5 10 15 25 5% 525 638 814 1039 1693 10% 550 805 1297 2089 5417 15% 575 1006 2023 4069 16459 20% 600 1244 3096 7704 47698
Canyouinterprettheabovetable?
4. Neverevergiveup! Harsha and Varsha, twins, decide to invest Rs. 3000 every year when they are 25 years old. Harsha just gaveupattheageof30whereasVarshacontinuedtoinvestregularly. Afewyearslater,Harshadecided to make up for all those years so she investeda lump sum of Rs. 20,000 when she turned 35 andagain investedRs.25,000attheageof42.Thusbytheageof45,bothHarshaandVarshahadinvestedRs.63000 each.Assumingagrowthrateof15%,HarshahadRs.4lakhwhereasVarshahadRs.3.8lakh.
WhydidVarshalose?
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LEARNING
Simply divide72 by th e givenrate i.e. 72/8 = 9 years.Italso worksforfinding out rate earnedwhen money isdoubledingivenyears. TheRuleof72:
6. SkatingAway!!!!!
Leenais15andhasjustpassedherclassXexam.Shehasbeenattendingskatingclassregularlyforlast2years and she is recognized as one of the best in the group. Recently she heard from her master that INLINE Skates arebecoming popular, winning the competition in INLINE Skates can get her admitted to one of the best colleges 3years later under sport quota.Since then she has been obsessed with the idea of getting an inline skates andpracticewithit.LeenagoestothestoresellingthebestSkatesinthecityandfindsout thattheequipmentwouldcostherRs.40,000!
Heartbroken, she goes to her skating teacher and tells him about the inline skates. Her teacher is a young andtalentedskaterhimself.HelistenscarefullytoLeena.
Teacher:Whatisthetroublethen?
Leena:Sir,areyoumakingfunofme?HowcanIaffordthat?
Teacher: Leena you play really well for your age but I suggest you continue playing the normal skates for 45 Years.Wecanthenconsiderinlineskates.
Leena: Sir I know I dont need it right now but I would like to have it at least next 5 years so that I can participateinthecompetition.Butthepriceissohigh;thereisnowayIwillbeabletoaffordtheequipment even after 78 years. After all, I am going to be studying all along. I wont be earning. Right now I save about 400 rupees permonth but this paltry sumcan never get me that skates. The teacher smiled with a glint in his eyes. He said,LeenapleasedontthinkthatIammakingfunofyoursituation.Notatall.Infact you took me 10 years back intimewhenImadeasimilardecisiontobuymyownskateswhenIwasmerely 14!
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LEARNING
Leena got a little excited. She said, Really sir, did you succeed? You must have really pinched yourself to savesoMuchmoney!
Teacher:Youseethatskates,thatstheonethatIboughtwhenIwasexactly21!
Leena:Howdidyoumanagesuchanamazingfeat?
Teacher: Just regular saving and investment. I did not had to sacrifice much either. I just saved and invested asmallamount regularly and did not stop till I got what I wanted. I also started saving about 150 rupees everymonthforthelasttwoyearsinhighschool andthensavedmoreandmore asIgrewupand earnedalittlebitofmoney.
Leena:DoyouthinkIwillbeabletobuytheskatestoo,onmyown...thatisIdontwanttobothermydad.
Teacher:Ofcourseyouwillbeableto!Getapenandpaperandletsmakeyouaplan!!
Amount permonth Rs.200 Rs.300 Rs.400 Total Periodof Investment 8years 6years 5years Principal Amount 19,200 21,600 24,000 Possiblerate ofInterest 10% 9% 8% Final Amount
7.TheInflationTermite:Beware! Atwhatpricedidyoubuyyourschoolbaglasttime?Willyougetitforthesamepricetoday?Theansweris probably no. This means the price of things keep on increasing. This phenomenon of price rise is called Inflation. Now let us assume, the price of your school bag was Rs.200 last year and it costs Rs.210 this year, the inflationratethereforeis5%(=10/200*100=5%).NowifyouhadsavedRs.200lastyearandexpectedtobuy thebagthisyearwithyoursavingyouwouldbeshortofRs.10.Therefore,itveryimportantthataresavings areinvestedataratewhichishigherthaninflation. Forexample,ifyouhaveinvestedRs.100attherateof10%andtheinflationis5%,thenyouhaveactually earned only 5%. (10% 5% = 5%). This 5% is your real rate of return and 10% is called as nominal rate of return. Activity:XI SmartGuideforyourfamilyActivity:
LEARNING
Session5 StockMarket
Canyouidentifythesebuildings? NationalStockExchange andBombayStockExchange.TheoldeststockmarketinAsia,BSEstandsforBombay StockExchangeandthelargeststockexchangeinIndiaandthethirdlargestintheworldintermsofvolumeof transactions, NSE stands for National Stock Exchange, both are Mumbaibased stock exchanges. Though a numberofotherexchangesexist,NSEandBSEarethetwomostsignificantstockexchangesinIndia,andare responsibleforthevastmajorityofsharetransactions. WhatisaStockExchange? Astockexchangeisanorganizationconstitutedforthepurposeofassistingandcarryingoutbuying,selling orotherwisedealinginsecurities. Whataresecurities? Securitiesarefinancialinstrumentsandincludeinstrumentssuchasshares,bonds,debenturesofacompany or body corporate or a government. Thus, a stock exchange provides a trading platform, where buyers and sellerscanmeettotransactinsecurities.Astockexchangecouldbearegionalstockexchangewhoseareaof operation/jurisdictionislimitedtoaregionoranationalexchangepermittedtohavenationwidetrading.
EARNING
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AboutSEBI Thefunctionofthesecuritiesmarketistoallowcompaniestoraisecapitalfrompublic(primarymarket)and to enable trading in the shares of public companies (secondary market). Securities and Exchange Board of India(SEBI)isabodysetupbytheParliamentin1992toprotectinvestors,andtoregulateanddevelopcapital market.Itstartedoperationsin1988throughanorderofGovernmentofIndia.ItisheadquarteredinMumbai withregionalofficesinDelhi,Kolkata,ChennaiandAhmedabad. Companieswhowanttoraisecapital(money)frompublichavetodisclosetheirfulldetailsasperrulesmade bySEBI.Subsequently,thesecompaniesarerequiredtopublishinformationperiodicallyforthebenefitofthe investors.Incaseoftakeoverofacompany,therulesmadebySEBIhavetobefollowedsothattheinterest ofshareholdersofthecompanyisprotected. Buying and selling of shares takes place in the stock exchanges through stock brokers. These entities can functiononlyiftheyhaveSEBIlicense.TheyarealsorequiredtofollowruleslaiddownbySEBI,toprotectthe investors.SimilarlySEBIalsoregulatesotherparticipantsinthecapitalmarketslike,subbrokers,depositories, depositoryparticipants,portfoliomanagers,merchantbankers,sharetransferagentsetc. Mutualfundscollectmoneyfrompublicundervariousschemesandinvestinthemarketonbehalfofinvestors and are also governed by rules formulated by SEBI. Mutual Funds have to disclose details of the scheme, where they will invest money, the fees charged from the investor etc. They also have to make periodic disclosuresforthebenefitofinvestorsasmandatedbySEBI SEBI also educates investors, facilitatesredressalof their grievances and protects them by introducing consumerfriendlydisclosurenormsfromtimetotime. Formoreinformationpleasevisitwww.sebi.gov.in
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