Budgeting and the emergency fund

Q1. Which statement best describes “Net worth”?

1. Net worth is everything you own minus everything you owe. Tracking it shows whether you are becoming wealthier over time.
2. A fixed expense is a cost that stays the same each month, such as rent or an EMI. It is hard to cut quickly.
3. Paying yourself first means moving savings out as soon as income arrives, before spending on anything else.
4. Paying only the minimum due on a credit card leaves the rest to attract high interest, so the debt lasts for years.

Q2. Which statement best describes “50-30-20 rule”?

1. In a zero-based budget, every rupee of income is assigned a purpose, so that income minus planned spending and savings equals zero.
2. Lifestyle inflation is spending that rises with each increase in income, leaving savings unchanged.
3. The 50-30-20 rule splits income into needs (50%), wants (30%) and savings or debt repayment (20%). It is a starting point, to be adapted.
4. Paying yourself first means moving savings out as soon as income arrives, before spending on anything else.