Managing Income and Expenses Basics

Income refers to money received regularly from work (salary, profit) or interest on savings/investments.
Expenses are funds spent for specific purposes, such as food, clothing, housing, transportation, and communication.
Budgeting involves planning monthly income and expenses to ensure sufficient funds are available.
Tracking daily expenses is crucial for understanding spending habits and managing finances.

Identify daily, weekly, and monthly expenditures for better awareness.
Record every expense daily to maintain an accurate account of spending.
Retain all receipts to track purchases effectively.
Calculate the total expenses at the end of each month to evaluate spending patterns.
Perform this exercise consecutively for three months to identify trends and make informed decisions.
Aim to reduce unnecessary spending for better financial management.

SMART stands for Specific, Measurable, Achievable, Realistic, and Time-bound, which helps in creating clear and trackable goals.
Specific: Clearly define what you aim to accomplish; avoid vague statements.
Measurable: Quantify your goal so progress can be tracked.
Achievable: Set realistic expectations; high expectations can hinder progress.
Realistic: Assess the feasibility of your plan to achieve your goal.
Time-bound: Establish a timeframe for achieving your goal to maintain focus and accountability.

Saving involves setting aside a portion of income for future use rather than immediate spending.
It is crucial for achieving long-term goals, such as buying a house or ensuring a comfortable retirement.
Savings provide a safety net for unexpected financial emergencies, reducing stress and increasing peace of mind.
Without savings, individuals may resort to borrowing, which incurs interest and financial burdens.

Create a savings and spending plan, avoiding unnecessary expenses and isolating savings in a separate account.
Focus on clearing high-interest debts before initiating savings strategies.
Allocate a portion of any income increase to savings to maximize growth.
Automate savings through regular bank transfers to encourage consistent contributions.
Utilize tax-benefit schemes like EPF, PPF, NSC, and NPS to enhance savings and minimize taxable income.

A bank is a financial institution that accepts public deposits and creates credit, regulated in India by the Reserve Bank of India (RBI).
Banks mobilize public funds, providing safe custody of savings with interest payments to depositors.
Types of deposits/accounts include:
- Saving Deposits: Encourage savings among the public, suitable for salary earners, low-interest rates, unlimited withdrawals allowed.
- Further account types may include Fixed Deposits, Current Accounts, and Recurring Deposits, each with varying features and interest rates.