Money Management - Orchids

# Money Management

Money management helps us to learn how to manage money. Here students will learn about EMI options, EMI formulas in math, and what is profit and loss account. This content is also connected with the math concept of percentages, circle graphs, addition, subtraction, and division word problem.

## What Is Money Management?

Money management is tracking expenses and investments and budgeting one’s own money. The amount of money that we invest is called investment. When we invest money in the bank, it provides an additional amount with our money. The additional amount offered by the bank is known as interest.

## EMI Options:

When we buy goods, some banks provide us with the EMI option, which allows us to pay the amount in equal monthly installments. The complete form EMI is “Equally Monthly Installment.”

The EMI is calculated by dividing the total amount by the number of months.

Suppose you bought an almirah for Rs 20,000 and want to go for the EMI option for 10 months.
Then each month, you have to pay Rs (20,000 ÷ 10) = Rs 2,000.

## What Is A Profit and Loss Account?

While managing money, we should always understand the profit and loss that can occur.
When we invest our money, and in return, we get an amount that is less than the investments, then we incur a loss.
The loss is calculated by subtracting the amount from the investment.

When we invest our money, and in return, we get the amount which more than the investments, then we get profit. The profit is calculated by subtracting the investment from the amount.

### Question 1:

Danish Invested Rs 6400 in Share Marketing and Received Rs 7800 at the End of Five Years. Calculate the Profit.

Amount invested = Rs 6400
The amount received at the end of five years = Rs 7800
Profit = Amount received at the end of five years – Amount invested.
= Rs 7800 – Rs 6400
= Rs 1400
Therefore, Danish received Rs 1400 as profit.

### Question 2:

Sonali Has a Saving Account in a Bank. She Saved Rs 5000 for 1 Year. If the Bank Provides Her with 10% Interest. Find the Total Amount She Will Receive at the End of 1 Year.

### Step 1:

Amount saved = Rs 5000.
Rate of interest = 10%
Interest is calculated on the total amount.
Interest amount = Rs 10% of 5000.
=Rs( 10 100 × 5000)
=Rs(10 × 50)
=Rs 500

### Step 2:

Amount saved = Rs 5000
Interest provided by bank = Rs 500
Total amount received at the end of the month = Rs 5000 + Rs 500
= Rs 5500

### Question 3:

Ranu and Jiya Want to Visit Museum, but They Don’t Have Money. Ranu Took a Loan of Rs 2500 From Her Friend and Promised to Return Her Rs 3500 After Two Months. Jiya Took a Loan From the Bank and Had to Pay Rs 1000 for Three Months. Calculate Who Has to Pay More Interest. And How Much More?

### Step 1:

Amount Ranu took from her friend = Rs 2500.
Interest paid = Rs 3500 – Rs 2500
= Rs 1000

### Step 2:

Amount Jiya took from the bank = Rs 2500
Amount she paid in 1 month = Rs 1000
Amount she paid in 3 months = Rs 1000 × 3
= Rs 3000

### Step 3:

Amount Jiya took from the bank = Rs 2500.
Amount she has to pay = Rs 3000
Interest paid by Jiya = Rs 3000 – Rs 2500
= Rs 500

### Step 4:

Interest paid by Ranu = Rs 1000
Interest paid by Jiya = Rs 500
Therefore, Ranu paid more interest.
Amount Ranu paid more = Rs 1000 – Rs 500
= Rs 500

Therefore, Ranu paid Rs 500 more than Jiya.

### Question 4:

Aman Earns Rs 7000 in a Month. He Spends Rs 2200 on Food and Rs 1000 on the Rent of the House. He Bought Gifts for His Family and Spent Rs 1160 on Gifts. He Saved the Remaining Amount. Calculate the Amount He Saved.

### Step 1:

Amount spend on food = Rs 2200
Amount spend on rent of the house = Rs 1000
Amount spend on gifts = Rs 1160
Total amount spends = Rs 2200 + Rs 1000 + Rs 1160
= Rs 4360

### Step 2:

Total amount earned = Rs 7000
Total amount spends = Rs 4360
Amount saved = Rs 7000 – Rs 4360
= Rs 2640
Therefore, he saved Rs 2640.

### Question 5:

The Given Pie Chart Shows How Sushant Manages His Money in a Month. Observe the Chart Properly and Answer the Following Questions:

1. Where Does He Spend the Most Money?
2. Where Does He Spend the Least Money?
3. How Much Money Does He Save in a Year?
4. Find the Total Amount He Spends on Food and Transport.
5. Find the Total Amount He Spends on LIC and Mediclaim.

### Answe 5:

1. According to the given pie chart the most amount was spent on food. He spends Rs 4000 on food.
2. According to the pie chart the least amount was spent on transport. He spends Rs 1260 on transportation.
3. The amount he saved in a month = Rs 2000
Number of months in a year = 12
The amount he saved in a year = Rs (2000 × 12)
= Rs 24,000
Therefore, he saved Rs 24,000 in a year.
4. The amount he spends on food = Rs 4000
The amount he spends on transport = Rs 1260
Total amount spends on food and transport = Rs 4000 + Rs 1260
= Rs 5260
Therefore, the total amount spent on food and transport was Rs 5260.
5. The amount he spends on LIC = Rs 3000
The amount he spends on Mediclaim = Rs 1440
Total amount spends on LIC and Mediclaim = Rs 3000 + Rs 1440
= Rs 4440

Therefore, the total amount spent on LIC and Mediclaim was Rs 4440.

### Question 6:

Priya Wants to Gift a Cell Phone Worth Rs 36,240 to Her Friend. But She Didn’t Have So Much Money. She Decided to Choose the EMI Option for a Year. Calculate the Monthly Installment.