Personal budget

1. Karneeti Part 528 - Personal Budget before National Budget - By CA Umesh
Sharma
1 message
CA Umesh Sharma <fcaumeshsharma@gmail.com> Mon, 29 Jan 2024 at 12:34
To: R.B Sharma and Co- Chartered Accountants <rbsharmaandco@gmail.com>
Bcc: karneeti7@googlegroups.com
Dear Professional Colleagues,
Karneeti Part 528
and also read this article by clicking on the link provided
In English - http://epaper.lokmat.com/articlepage.php?articleid=LOKTIME_AULT_20240129_9_5
In Marathi - http://epaper.lokmat.com/articlepage.php?articleid=LOK_AULK_20240129_6_6
Personal Budget before National Budget
Arjuna (Fictional Character): Krishna, On 1st February 2024, our
finance minister would be presenting the interim budget, to keep
the operations of government running due to forth coming
elections. How is the concept of budget relevant to the individual
in personal finance?
Krishna (Fictional Character): Arjuna, a lot of people are excited
for this upcoming budget, and you can hear discussions about the
same at every corner. However, while focussing on the budgeted
expenditure of the country and balance of payment of the country
many of us ignore the personal budget and debt planning. This
month we have discussed various aspects of personal finance
which included steps to achieve financial goal, sufficiency of
income and planning of expenses. As discussed earlier, mere
earning does not guarantee oneself the fulfilment of financial
goals. One has to also plan their expenditure for optimum
utilization of these earned income. The best way to plan

2. expenditure is to prepare budget and follow the same throughout
the month. Planning for debt obligations is equally important as
this take up a significant portion of one’s income.
Arjuna (Fictional Character): Krishna, please explain the concept
of budget and also tell us the importance of preparation of budget?
Krishna (Fictional Character): Arjuna, in simple language,
Budget is a financial document used to estimate revenue and
expenses of the upcoming year/month. From National Interest
Perspective the government’s financial planning and decisions are
based on the budget introduced presented by the finance minister.
From Household point of view, the monthly budget shall hold
significant place in the financial planning of an individual.
Monthly revenues are more or less known to the individuals and
expected expenses shall be proportioned against such income to
better organize funds.
The importance of preparation of household budget includes:
1. Identify and Plan for Various Expenses: Recognition and
categorization of routine and non-plan expenditures such as
children's education, insurance premiums, investments, EMI
for house or cars, and other regular expenses, to ensure all
aspects of family expenditure are better planned.
2. Adapt to Changing Lifestyles: It helps in acknowledging
the impact of a fast-changing lifestyle on expenditures, such as
increased costs for hoteling and hospitality.
3. Regularly Review and Control: Monthly review of
expenses helps in bringing better control over expenditure.

3. 4. Teach Discipline and Prudence: Budgeting process can be
used as a tool to educate family members on responsible
financial practices and the value of living within means.
5. Balance Income and Expenditure: Ensuring that
expenditures align with the available income to maintain
financial stability.
Arjuna (Fictional Character): Krishna, Why it is important to
plan your debt obligations?
Krishna (Fictional Character): Arjuna, loans are very easily
available to individuals these days and many of us access these
facility without giving enough thought to its implication on their
future expenses. As discussed earlier monthly repayment amount
shall not exceed 30% of one’s monthly income. Importance of Debt
Planning in financial decision making includes:
1. Avoids Financial Strain: Debt planning helps individuals and
families avoid excessive debt that can lead to financial strain.
2. Reduces Interest Costs: Strategic debt planning allows
individuals to minimize interest costs associated with loans. By
understanding the terms of loans and prioritizing the repayment
of high-interest debts, individuals can save money in the long run
and allocate resources more efficiently.
3. Preserves Creditworthiness: A well-thought-out debt plan
helps maintain a good credit score. Timely payments and
responsible management of debt contribute to a positive credit
history, which is crucial for obtaining favorable terms on future
loans, such as mortgages or car loans.

4. Arjuna (Fictional Character): Krishna, what should one learn
from this?
Krishna (Fictional Character): Arjuna, Budgeting is a very
powerful tool in financial planning and the use of same in our day-
to-day life can help everyone in bringing better control over our
funds. Many of us are also worried about the balance of payment
of the country and the figures of exports and imports but ignore
our very own loan planning which can lead to various financial
mishaps. One shall always prioritize their monthly budgeting and
debt planning to ensure a financially planned and worry-free life.
--
Thanks & Regards.
CA Umesh Sharma
Central Council Member ICAI
R.B. Sharma & Co.
Chartered Accountants
Block Number 7/8, 2nd Floor,
Shangrila Complex, Near Varad Ganesh,
Near Kartiki Hotel, Samarth Nagar,
Chhatrapati Sambhaji Nagar, Maharashtra 431001
*Contact no. 0240 233 2511
*Cell no. 09822079900
--
Your Comments are always welcome at fcaumeshsharma@gmail.com.
Enjoy Reading Karneeti Articles at www.karneeti.com
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