PERSONAL

FINANCIAL
MANAGEMENT

CHALLENGES AND OPPORTUNITIES
Vinay Patil
Vinay R
Vinay Kayasth
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 and
describes the spending, financing, and
investing plans that are intended to
achieve those goals
CREATING AND MANAGING
A BUDGET: KNOW YOUR
HABITS
First, know your
habits by tracking
your expenses
to fully understand
how you spend
your money
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
SECOND, DO
THE MATH!
DETERMINE
YOUR
MONTHLY
INCOME
MINUS
EXPENSES
Total Monthly Take-Home Income (minus taxes, health insurance, other payroll
deductions, 401K)
Household Expenses
Rent or Mortgage
Utilities (water, sewer, gas/electricity)
Home/Cell Phone
Groceries
Other Household (Cable, etc.)
Transportation Expenses
Car Loan Payment
Gas, Tolls, Parking, Other
Car Insurance (set aside if paid annually or semi-annually)
Other Expenses
Pet (Food, Vet)
Insurance/Co-pays, Prescriptions
Fun (entertainment, dining out, move rental, etc.)
Minus Total Expenses
Total Monthly Surplus/Shortage
CREATING AND MANAGING
A BUDGET: INCOME V EXPENSES
The case of Mr Ramesh and Suresh
RAMESH SURESH
Monthly 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 7000
Miscellaneous exp : Rs 10000
(Fuel, shopping, bills,etc)

SAVINGS: Rs 3000 SAVINGS: Rs 25000

CREATING AND
MANAGING
A BUDGET:
WANTS V NEEDS

OPPORTUNITIES
INCOME
Take-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 Payments
SAVINGS: 20%
Money set aside for vacations, major
repairs, new appliances, to pay down
existing debt, emergencies
a down-payment on a car or house,
charity
RETIREMENT: 10%
Ideally, 10% of your gross income
JUST FOR FUN: 10%
Everybody needs some fun


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

POWER OF COMPOUNDING:
START SAVING NOW!
SAVING Rs 50 A DAY AMOUNT YOU PUT
IN
ACTUAL WORTH*
Year 5 Rs 91250 Rs 100650
Year 10 Rs 182500 Rs 229550
Year 20 Rs 365000 Rs 603450
Year 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 amount s are pre-tax.

Benjamin Franklin said: "If you know how to spend less than you
get, you have the philosopher's stone."
CHALLENGES TO PERSONAL
FINANCING

FINANCIAL MANAGEMENT
CREDIT CARDS
Although credit cards may
seem like your ticket to buy
anything you want but it is
important to
understand just how much
that little piece of plastic
could really cost you



1-15
HOW THE INTERNET FACILITATES
FINANCIAL PLANNING



1-16
INTEGRATING KEY CONCEPTS

THANK
YOU