Vidyavardhini’s College of Engineering &

Technology
Department of Master of Management Studies (MMS)

Assignment on
Financial accounting

Student Name: Mansi S. Sankhe

FY MMS Semester II

Scholar No.

SUBMITTED

TO

MS candida gomes

2023-24
Hello I am MANSI SANJAY SANKHE and I am a 23year old &
Rs.1,00,000 per month is my net pay {net of all taxes and deduction}

I will list few: The 50/30/20 Rule Explained

-Mastering the 50/30/20 Rule:

Breaking Down the 50%

- Necessities Unveiled: A Closer Look at Your Essential Expenses

Understanding the 30%

- Balancing Act: Navigating Your Wants Without Breaking the Bank
Building a Solid 20% Savings Plan
- save Like a Pro: Building a Secure Financial Future

The 50-30-20 rule recommends putting 50% of your money toward

needs, 30% toward wants, and 20% toward savings. The savings
category also includes money you will need to realize your future
goals.
 The very first thing to do is estimate your monthly expenses very
honestly. I will list few:
SR.N PARTICULAR AMOUNT
O
1 Home loan 25,000
2 Medicine & medical expenses 2,000
3 Electricity 1,500
4 gas 1,000
5 groceries 15,000
6 internet 1,000
Total 45,500

The 50% allocation for needs in the 50/30/20 budget rule encompasses essential
expenses that are crucial for maintaining a stable and sustainable lifestyle. Here's a
breakdown of what falls under this category:

[Link]: This includes rent or mortgage payments, property taxes, homeowner's

or renter's insurance, and utilities such as electricity, water, heating, and internet.
Housing is often the largest expense for many individuals or families.

[Link]: Expenses related to commuting, vehicle payments, gasoline,

public transportation fares, maintenance and repairs, parking fees, and auto
insurance fall into this category.

[Link]: Budgeting for groceries and household essentials like toiletries,

cleaning supplies, and personal care products is essential for maintaining a healthy
lifestyle.

[Link]: Costs associated with health insurance premiums, copayments,

prescriptions, medical supplies, and routine medical appointments should be
considered in this allocation.

[Link] Clothing: While discretionary spending on clothing and fashion falls under
the 30% category, allocating a portion of the needs budget for essential clothing
items is reasonable. This may include work attire, school uniforms, or seasonal
clothing necessities.

[Link]: Besides housing utilities, other essential services like phone bills, cable
or streaming services, and subscriptions for essential services also fall under this
category.
[Link] Debt Payments: While ideally, debt should be minimized, if you have
outstanding debts such as student loans, credit card balances, or personal loans,
making minimum payments is crucial to avoid penalties and maintain your credit
score.

The 50% allocation for needs ensures that essential living expenses are prioritized
and adequately covered before allocating funds to discretionary spending or
savings. By managing these expenses effectively, individuals can build a solid
foundation for their financial well-being and maintain stability in their day-to-day
lives.

The 30% allocation for wants in the 50/30/20 budget rule allows individuals to enjoy
discretionary spending on non-essential items and experiences that enhance their
quality of life. Here's a breakdown of what falls under this category:
1. Dining Out and Entertainment: This category covers expenses related to
eating at restaurants, cafes, or ordering takeout, as well as entertainment
activities such as going to the movies, concerts, sporting events, or other
leisure activities.
2. Travel and Vacation: Allocating funds for travel expenses, including airfare,
accommodation, transportation, meals, and entertainment while on vacation,
falls under this category. It also encompasses weekend getaways and other
travel experiences.
3. Hobbies and Recreation: Money spent on hobbies, interests, and
recreational activities such as sports, hobbies, crafts, memberships to clubs or
organizations, or purchasing equipment for leisure pursuits.
4. Electronics and Gadgets: Discretionary spending on electronics, gadgets,
and technology upgrades, including smartphones, tablets, computers, gaming
consoles, and other electronic devices, is included in this category.
5. Clothing and Fashion: While basic clothing needs are covered under the
50% allocation for needs, the 30% category allows for discretionary spending
on fashion items, accessories, designer clothing, and other non-essential
wardrobe purchases.
6. Home Decor and Furnishings: Purchases related to home decor,
furnishings, interior design, and home improvement projects that are not
essential for daily living fall under this category.
7. Gifts and Donations: Allocating funds for gift-giving, charitable donations,
contributions to fundraisers, or supporting causes and organizations you care
about.
The wants category provides individuals with the flexibility to indulge in leisure
activities, pursue personal interests, and enjoy the finer things in life without
compromising their financial stability or long-term goals. While it's important to enjoy
discretionary spending, it's also essential to prioritize and manage these expenses
responsibly within the allocated budget. Tracking and evaluating discretionary
spending can help individuals make informed decisions and ensure that they derive
maximum satisfaction from their discretionary purchases while staying within their
means.
The 20% allocation for savings and debt repayment in the 50/30/20 budget rule is
crucial for securing financial stability, building wealth, and achieving long-term
financial goals. Here's an elaboration on what falls under this category:
1. Emergency Fund: Establishing an emergency fund is a top priority within the
savings category. This fund acts as a financial safety net to cover unexpected
expenses such as medical emergencies, car repairs, or job loss. Experts
recommend setting aside three to six months' worth of living expenses in an
easily accessible savings account.
2. Retirement Savings: Contributing to retirement accounts such as 401(k)s,
IRAs, or other employer-sponsored retirement plans is essential for building
long-term wealth and securing financial independence in retirement. Take
advantage of employer matching contributions and consider increasing
contributions over time to maximize retirement savings.
3. Investments: Allocating funds for investments in stocks, bonds, mutual funds,
index funds, real estate, or other investment vehicles can help grow wealth
over time and generate passive income streams. Diversifying investments
across different asset classes and risk profiles can help mitigate risk and
maximize returns.
4. Debt Repayment: Prioritizing debt repayment is crucial for achieving financial
freedom and reducing financial stress. Focus on paying off high-interest debt
such as credit card debt, personal loans, or payday loans first, as they typically
incur the highest interest rates and can accumulate quickly over time.
Consider using the debt avalanche or debt snowball method to systematically
pay off debts and track progress.
5. Education and Skill Development: Investing in education, skill development,
or professional certifications that can enhance earning potential and career
advancement opportunities falls under this category. Consider allocating funds
for tuition, workshops, online courses, or seminars that align with your career
goals and personal interests.
6. Long-Term Savings Goals: Saving for major life events such as buying a
home, starting a family, funding children's education, or traveling the world
requires long-term planning and disciplined savings habits. Set specific
savings goals, create a timeline, and regularly review progress to stay on
track.
7. Health Savings: Setting aside funds for healthcare expenses not covered by
insurance, such as deductibles, copayments, prescriptions, and elective
 medical procedures, can help mitigate the financial burden of unexpected
medical costs.
By allocating 20% of your income to savings and debt repayment, you prioritize
financial security, wealth accumulation, and long-term financial success.
Consistently saving and investing a portion of your income can help you build a
robust financial foundation, achieve financial goals, and weather economic
uncertainties effectively. Adjust your savings and debt repayment strategies as your
financial situation evolves and always seek professional guidance when needed to
make informed financial decisions.

INSURANCE:
For this, I need to take a term policy for a sum of 10to 12 times your annual income.
As the premium for term policy is minimum. So, taking term insurance policy for Rs.
1 × 12 × 12 = Rs. 1.44 crores. In the event of any untoward happening you
dependent family will get Rs.1.44 cr. So here we can make investment about Rs.
10000 per month for insurance purpose.
CONTINGENCY FUND: A contingency fund is a reserve of money set aside to
cover unexpected expenses or emergencies that may arise in personal finances,
businesses, or government operations. It serves as a financial cushion to mitigate
the impact of unforeseen events such as medical emergencies, car repairs, or
economic downturns. Building and maintaining a contingency fund is a prudent
financial practice to ensure stability and preparedness for the future. Experts often
recommend having three to six months' worth of living expenses saved in a
contingency fund for [Link] case of any untoward contingency , the
dependant members of my family need immediate financial rehabilitation.

INVESTMENT FOR HIGH SAVING & RETURNS: Investing for high savings and
returns typically involves a balanced approach that considers risk tolerance,
investment horizon, and diversification. Here are some options to consider:

Stocks: Investing in individual stocks or exchange-traded funds (ETFs) can offer

high returns over the long term, but they also come with higher risks. Diversifying
across different sectors and companies can mitigate some of this risk.

Bonds: Bonds are generally considered safer than stocks but offer lower returns.
However, investing in corporate bonds or high-yield bonds can provide higher
returns with increased risk.

Mutual Funds: Mutual funds pool money from multiple investors to invest in a
diversified portfolio of stocks, bonds, or other assets. Some mutual funds focus on
growth and may offer higher returns.
Real Estate: Investing in real estate, either through rental properties or real estate
investment trusts (REITs), can provide steady income and potential for capital
appreciation.

Cryptocurrency: Cryptocurrencies like Bitcoin and Ethereum have the potential for
high returns but come with significant volatility and risk. It's essential to research and
understand the market before investing.

Peer-to-Peer Lending: Platforms that connect investors with borrowers can offer
higher returns compared to traditional savings accounts or bonds, but they also
carry higher risks of default.

Dividend-paying Stocks: Investing in stocks that pay dividends can provide both
income and potential for capital appreciation.