MATH PROJECT 2025-2026

CONTENT

1. Introduction (27-3 Pages)

Importance of Financial Management

Financial management is crucial in today's world as it helps individuals and

organizations to control and effectively use their resources. In personal finance,
this involves managing income, saving for goals, investing wisely, and preparing
for future needs like retirement, education, or unforeseen emergencies. Effective
financial management not only helps in reducing financial stress but also provides
a pathway to wealth accumulation, financial independence, and security.

The role of financial management extends beyond individuals to businesses and

governments, as they too rely on proper financial management practices to achieve
growth, ensure sustainability, and meet financial obligations. A well-managed
financial system in any economy fosters financial stability, promotes economic
growth, and helps in attracting investments. This is why financial literacy is
becoming increasingly important for individuals worldwide, as it directly
influences one’s economic well-being and stability.

Key Components of Financial Management:

 Budgeting: Tracking income and expenses to ensure that resources are

allocated efficiently.
 Saving and Investing: Ensuring funds are set aside for future needs and that
investments are made wisely to achieve financial goals.
 Debt Management: Handling loans and credit responsibly to avoid financial
strain and ensure good credit health.

By applying these principles, individuals, families, and businesses can improve

their financial standing and work toward long-term financial security.

Purpose of the Project

The purpose of this project is to provide a thorough understanding of various

financial tools and services offered by banks, with a specific focus on different
types of bank accounts and how individuals can effectively manage their finances
through these tools. Additionally, the project aims to demonstrate the significance
of home budgeting and how it helps individuals manage their finances in a
structured manner.

The project covers topics such as:

 Types of bank accounts (Savings, Current, Fixed Deposit, Recurring Deposit,

etc.).
 Interest rates offered on various accounts.
 The importance of home budgeting and how to create a personal budget.
 Case studies showcasing practical applications of bank accounts and
budgeting.

By the end of this project, readers will gain practical knowledge about financial
management, allowing them to make informed decisions regarding banking and
personal finance management.

Brief Introduction to Banks and Their Services

Banks are at the core of the financial system, providing a wide range of services
that help individuals, businesses, and governments manage their money. Banks
offer financial products like savings and current accounts, loans, credit facilities,
insurance products, and investment services.

Modern banks also offer online banking, mobile banking, and other digital
services, making it easier for customers to access their accounts and perform
transactions anytime, anywhere. Banks act as intermediaries by receiving deposits
from savers and lending them to borrowers, which ensures that money circulates
effectively within the economy.

Types of Banks:

 Commercial Banks: Offer services like savings and current accounts, loans,
and credit cards to individuals and businesses.
 Cooperative Banks: Operate on a cooperative model, offering savings and
loans to their members.
 Development Banks: Provide long-term loans to businesses for growth and
infrastructure projects.
 Retail Banks: Focus on individual consumers, providing personal banking
services such as loans, savings accounts, and mortgages.
2. Types of Bank Accounts (12-15 Pages)

Savings Account

A savings account is one of the most common types of bank accounts, offering
individuals a safe place to store their money while earning interest. These accounts
typically have low minimum balance requirements and offer easy access to funds.

Purpose: The primary goal of a savings account is to allow individuals to save

money while earning a small return in the form of interest. Savings accounts are
ideal for building emergency funds or saving for short-term goals like vacations or
large purchases.

Features and Benefits:

 Earn interest on deposited funds (interest rates vary between 2% and 4%).
 Low minimum balance requirements.
 Easy access to funds via ATMs, online banking, or mobile apps.
 Secure storage for money.

Common Uses:

 Emergency savings fund.

 Saving for future expenses, such as a car or home deposit.

Example: SBI offers a standard savings account with a minimum balance require
ement of ₹1,000 and an interest rate of 2.75% per annum. Customers can access
their funds through ATMs, bank branches, or online banking.

Current Account

A current account is designed for businesses or professionals who need to

perform a large number of transactions on a daily basis. Unlike savings accounts,
current accounts typically do not earn interest.

Purpose: This type of account is ideal for managing daily business operations,
including paying bills, managing cash flow, and handling payroll.

Features and Benefits:

  Unlimited transactions: No restrictions on the number of deposits or
withdrawals.
 Overdraft facilities: Allows businesses to withdraw more than the available
balance in case of cash shortages.
 No interest earned on the balance.

Example: ICICI offers a current account with features like overdraft facilities,
access to a cheque book, and digital banking options. The minimum balance
requirement varies by the type of current account.

Recurring Deposit Account

A Recurring Deposit (RD) account allows individuals to deposit a fixed amount

regularly over a predetermined period of time and earn interest on the deposited
amount.

Purpose: The RD account is ideal for individuals who wish to save a fixed amount
every month and earn interest on the same.

Features and Benefits:

 Fixed monthly deposits for a fixed period.

 Interest rates higher than those offered by savings accounts (typically 5% -
7%).
 Interest is compounded quarterly, making it a lucrative option for regular
savings.

Example: SBI’s Recurring Deposit offers an interest rate of 5.75% for a tenure of
1 year, with monthly deposits of ₹1,000 or more.

Fixed Deposit Account

A Fixed Deposit (FD) account is an investment product where an individual

deposits a lump sum amount with the bank for a fixed tenure and earns interest on
that deposit.

Purpose: FDs are a popular choice for individuals seeking guaranteed returns on
their investment for a fixed period.

Features and Benefits:

  Higher interest rates compared to savings accounts (5% - 7%).
 Flexible tenure options (from 7 days to 10 years).
 Tax benefits: Tax-saving FDs are available under Section 80C of the Income
Tax Act.

Example: Axis Bank offers fixed deposit interest rates ranging from 5.5% to
6.5%, depending on the tenure.

Joint Account

A joint account is an account held by two or more individuals, where all parties
have equal access to the funds and share responsibility for transactions.

Purpose: Joint accounts are ideal for managing shared expenses, such as
household bills or joint savings for a family or business.

Types:

 Joint Tenants: All account holders must jointly manage the account.
 Either or Survivor: Any account holder can operate the account, and the
survivor gets full access to the account in the event of death.

Example: A husband and wife may open a joint account to manage household
expenses and savings for family goals.

NRE and NRO Accounts

Non-Resident Indians (NRIs) need specialized bank accounts to manage their

finances in India. These accounts allow NRIs to deposit and manage their earnings
from abroad while ensuring ease of remittances.

NRE Account:

 Tax-free interest.
 Funds are repatriable (can be sent back to the home country).
 Ideal for foreign income.

NRO Account:

 For managing income earned in India (e.g., rental income).

  Taxable interest.
 Limited repatriability.

3. Rates of Interest on Bank Accounts (6-8 Pages)

Interest on Savings Accounts

Savings accounts generally offer lower interest rates than other types of investment
accounts. The interest on savings accounts is subject to change depending on
economic factors and RBI policies.

 Standard Savings Account Interest Rates: Most Indian banks offer interest
rates between 3% and 4% per annum on savings accounts.
 High-Interest Savings Accounts: Some banks offer higher rates (around 6%
to 7%) for premium or higher balance accounts.

Factors Affecting Interest Rates:

 Economic conditions: Changes in the Reserve Bank of India (RBI) repo rate
can influence bank interest rates.
 Bank’s policy: Each bank sets its own rates based on its financial health and
objectives.

Interest on Fixed Deposits

Fixed deposits offer higher interest rates than savings accounts and are considered
a safe investment. The interest rate typically depends on the tenure and the amount
of deposit.

 Interest rates for Fixed Deposits: Generally range from 5% to 7%, with
long-term FDs offering better returns.
 Taxation: Interest earned on FDs is subject to TDS if it exceeds ₹10,000 in a
financial year.

Interest on Recurring Deposits

Recurring deposit accounts also offer attractive interest rates, ranging from 5% to
7% depending on the tenure.
Factors Influencing Rates:

 Compounding: Interest on RDs is compounded quarterly.

 Duration: Longer RDs generally attract higher interest rates.

4. Process of Opening and Managing a Bank Account (4-5 Pages)

Documents Required for Opening Accounts

To open a bank account, customers need to provide specific documents. The exact
requirements may vary depending on the type of account (e.g., savings, current,
FD).

 Savings Account: Proof of identity, proof of address, passport-sized

photographs.
 Current Account: Business registration documents, proof of identity and
address, proof of income.
 NRE/NRO Account: Passport, visa details, address proof, proof of income.

Steps Involved in Opening an Account:

1. Choose the account type based on personal or business needs.

2. Submit documents for KYC (Know Your Customer) verification.
3. Deposit the initial amount if required.
4. Complete the application process and sign necessary forms.

Managing and Maintaining an Account

To manage an account, individuals should regularly monitor their account balance,

make deposits, and avoid unnecessary fees by maintaining the minimum balance.
Online banking offers a convenient way to manage accounts.

5. Planning a Home Budget (12-15 Pages)

Importance of Budgeting

Budgeting is the cornerstone of financial management. It enables individuals to

plan their income and expenses, ensuring that they live within their means while
saving for future goals.

Key Benefits of Budgeting:

 Provides a clear picture of income and expenditure.

 Helps avoid overspending and accumulating debt.
 Enables savings for emergencies and long-term goals like retirement.

Steps to Create a Budget:

1. Track your income: Consider all sources of income.

2. List your expenses: Separate essential and non-essential expenses.
3. Set goals: Plan savings and allocate funds for long-term investments.
4. Review and adjust: Periodically check and adjust your budget.

Example of a Family Budget:

Consider a family with a monthly income of ₹50,000. Their budget breakdown

might look as follows:

 Housing: ₹15,000
 Utilities: ₹5,000
 Food: ₹10,000
 Savings: ₹5,000
 Transportation: ₹5,000
 Entertainment: ₹3,000
 Miscellaneous: ₹7,000

5. Case Studies and Real-Life Applications (5-6 Pages)

Case Study 1: Home Budget Planning Example

Background:

The Gupta family consists of four members: Mr. and Mrs. Gupta, both working
professionals, and two children aged 7 and 12. Mr. Gupta works as an IT manager
with a monthly salary of ₹80,000, and Mrs. Gupta is a school teacher with a
monthly income of ₹35,000. Their primary goal is to save for their children’s
education, their home loan repayment, and a comfortable retirement.

They live in a rented apartment in a city, and Mr. Gupta also has a side business
where he earns an additional ₹15,000 per month. Together, the family’s total
monthly income is ₹1,30,000.

Despite having a steady income, the Gupta family often finds themselves
struggling to manage their expenses and save adequately for the future. They
decided to create a detailed home budget to track their spending, save for their
goals, and achieve financial security.

1. Identifying Income Sources:

The Gupta family’s total monthly income comes from the following sources:

 Mr. Gupta’s Salary: ₹80,000

 Mrs. Gupta’s Salary: ₹35,000
 Mr. Gupta’s Side Business: ₹15,000

Total Monthly Income: ₹1,30,000

2. Categorizing Expenses:

The next step in their budgeting process is to list down their monthly expenses and
categorize them into fixed and variable expenses. This helps them understand
their spending habits and areas where they can cut costs.

Fixed Expenses:

Fixed expenses are consistent each month and do not change.

 Rent: ₹20,000 (for their rented apartment)

 Home Loan EMI: ₹25,000
 Insurance (Health + Life): ₹5,000
  Utilities (Electricity, Internet, Water Bills): ₹6,000

Total Fixed Expenses: ₹56,000

Variable Expenses:

Variable expenses change from month to month. These include discretionary

spending like food, entertainment, and transportation.

 Groceries and Household Supplies: ₹10,000

 Children’s Education (tuition, school fees, etc.): ₹12,000
 Transportation (fuel, public transport): ₹7,000
 Entertainment and Dining Out: ₹5,000
 Medical and Miscellaneous Expenses: ₹3,000

Total Variable Expenses: ₹37,000

Total Monthly Expenses: ₹93,000

3. Budget Allocation Strategy:

To ensure they are saving adequately, the Gupta family decided to follow the
50/30/20 rule of budgeting:

 50% for Needs: This includes essential expenses like rent, utilities,
groceries, etc.
 30% for Wants: This includes entertainment, dining out, and other
discretionary expenses.
 20% for Savings: This portion is allocated to savings, investments, and debt
repayment.

Based on their monthly income of ₹1,30,000, the Gupta family allocated the
following amounts:

 50% for Needs: ₹65,000

 30% for Wants: ₹39,000
 20% for Savings: ₹26,000
4. Reviewing and Adjusting Expenses:

After reviewing their current budget, the Gupta family found that their current
monthly expenses (₹93,000) exceed their allocated budget (₹65,000 for needs and
₹39,000 for wants). To rectify this, they decided to make a few adjustments:

1. Reducing Entertainment Expenses: The Gupta family realized that they

were spending ₹5,000 every month on dining out and entertainment. They
decided to reduce this to ₹3,000 per month.
2. Lowering Grocery Costs: They also adjusted their grocery budget by
cutting down on unnecessary purchases and sticking to more cost-effective
options, reducing this from ₹10,000 to ₹8,000 per month.
3. Child Education Costs: While the education cost was essential, they
decided to explore more affordable options for extracurricular activities,
saving around ₹2,000 per month.

After these adjustments, the total monthly expenses were reduced to ₹88,000,
which still exceeds their desired allocation for needs and wants by ₹1,000. They
continued looking for other small adjustments in areas like transportation (e.g.,
reducing the use of private cars) to balance the budget.

5. Savings and Investment Planning:

The Gupta family’s goal was to save ₹26,000 every month (20% of their income).
Here's how they planned their savings:

 Emergency Fund: ₹5,000 per month.

o Their priority was to build an emergency fund worth 3-6 months of
expenses. This would act as a cushion in case of an unexpected event
(job loss, medical emergencies, etc.).

 Children’s Education Fund: ₹10,000 per month.

o To prepare for their children’s higher education, the Guptas decided
to start a systematic investment plan (SIP) in equity mutual funds,
which would grow over time and provide sufficient funds when
needed.

 Retirement Savings: ₹6,000 per month.

 o The family also set up a Retirement Fund using a pension scheme
offered by a bank, with the goal of ensuring a comfortable
retirement.

 Short-term Savings for Home Renovation: ₹5,000 per month.

o The Gupta family was also planning to renovate their apartment after
3-4 years. They decided to set aside ₹5,000 per month in a fixed
deposit (FD) that would earn a guaranteed interest.

6. Monitoring and Reviewing the Budget:

The Gupta family decided to track their spending using a budgeting app that
would help them monitor both fixed and variable expenses. They planned to
review their budget every 6 months to make adjustments for any life changes
(like salary increments or changes in household expenses).

By sticking to this plan, they hoped to:

 Build a robust emergency fund.

 Save for their children’s education and their own retirement.
 Ensure that they lived within their means, prioritizing needs over wants.
 Be prepared for unexpected expenses or financial emergencies.

Outcome:

After three months of following their new budget, the Gupta family successfully
saved ₹78,000. They increased their emergency fund by ₹15,000, invested
₹30,000 in their children's education fund, and accumulated ₹9,000 for retirement.

While the Guptas had to make small sacrifices (such as cutting back on
entertainment and dining out), they were able to stick to their budget and meet their
financial goals. This experience reinforced their belief that a structured home
budget was a key tool in achieving long-term financial success.

Case Study 2: Bank Account Selection for Personal Financial Management

Background:

Rajesh, a 28-year-old software engineer, has been working with a multinational

company for the past 5 years. He decided to evaluate different bank accounts to
manage his personal finances effectively.

Rajesh’s income is ₹50,000 per month, and he wanted a bank account that offered:

1. Low transaction fees

2. High interest rates on savings
3. Convenience for online banking

After researching multiple banks, Rajesh narrowed down his options to SBI,
HDFC Bank, and ICICI Bank.

Account Evaluation:

1. SBI Savings Account:

o Interest Rate: 3.00% p.a.
o Minimum Balance: ₹1,000
o Features: Free online banking, access to ATMs, mobile app, and basic
online services.
o Pros: Large number of branches and ATMs; affordable minimum
balance.
o Cons: Relatively low interest rate compared to other banks.

2. HDFC Bank Savings Account:

o Interest Rate: 4.00% p.a.
o Minimum Balance: ₹10,000
o Features: Free access to HDFC ATMs, mobile banking, and email
alerts.
o Pros: Higher interest rate, better online banking features.
o Cons: Higher minimum balance requirement.

3. ICICI Bank Savings Account:

o Interest Rate: 3.50% p.a.
o Minimum Balance: ₹5,000
o Features: Free access to ATMs, mobile banking, and competitive
interest rates.
 o Pros: Easy access to funds and better customer service.
o Cons: Minimum balance requirement is higher than SBI.

Decision:

Rajesh decided to open an account with HDFC Bank because of the higher
interest rate and better online banking features. Although the minimum balance
requirement was slightly higher, Rajesh felt the benefits of the account outweighed
the cons.

These two case studies provide a practical application of home budgeting and
bank account selection, helping to understand the financial decision-making
process in real-life scenarios. They also give insight into how individuals prioritize
their goals, track their expenses, and choose banking products that align with their
financial objectives.