What is Budget - Explained in a simplest way.

 

 

Budget: The definition of budget: The word "budget" is derived from the popular French word "boutette," which means a leather bag, in which we used to keep cash and assets in earlier times.

 

Budget: Like any household or organisation, a country also has a budget. Simple estimates of expenses and income for the upcoming year and actual expenses and income in the previous financial year

 

Types of Income:

• Recurring Income:
• GST
• INCOME TAX

Recurring income is simply the regular income of the government. which primarily comes from various taxes people pay.

 

• One-Time Income:
• Sale of Assets
• sale of internet spectrum
• sale or long lease of land banks.

 

One-time income is simply income that occasionally happens.

 

Similarly, expenses also have two types.

• Recurring Expense:
• Salaries and pensions for all government employees

 

• One-Time Expense:

This is a rare expense, like building an airport or port.

 

INDIA’S FIRST BUDGET was presented in the year 1860 by James Wilson (of the British East India Company) before its independence.

  

James Wilson is the founder of the world-famous Standard Chartered Bank and The Economist magazine.

 

 

In the Constitution of India, Section 112 A, it is a mandatory duty to present the budget on a yearly basis in both the parliamentary houses (Lok Sabha and Rajya Sabha). And to get it passed all the accounts in parliament to become a law.

 

Finance Minister presents budget in House every year.

 

Process of the Budget:

 

Process goes through 4 phases.

• Formulation of the Budget

 

• Presentation of the Budget

 

• Converting a draught into a law

 

• Execution of the Budget

 

• Formulation of the Budget:

The person who presents does not start its preparation 1 month before the day of presentation like many university students do preparation for their exams.

 

Yes, it is an extensive process, which starts at least 5–6 months before by the committee, which is comprised of experienced economists. They analyse sector-wise, i.e., if a particular sector needs a push in the budget. For example, if building metros or roads requires certain funds to be set aside, they do it. They increase or decrease taxes sector-wise. Figure out the areas for tax rebates for industries to come in to tackle unemployment.

 

• Presentation of the Budget:

             Budget has two aspect i) Previous year's actual income and expense ii) Current year estimated income and expense It has a prepared draught of actual numbers. which has to move forward to the third step.

 

• Converting a draught into a law:

 

The draught has to be presented before both houses to get majority approval.

Majority of it has to get approval for

1. Finance Bill: A Proposed Bill for Financial Provision on Various Aspects
2. Appropriation bill: a permitted bill for withdrawing funds from government reserves.

 

Only after getting this done can the budget move forward to the fourth stage.

 

• Execution of the Budget:

Budget is being presented on 1^st February at 11.A.M IST, every year, and it gets Implemented by 1^st April of every year, gives cushion of two months implement new budget.

 

Major Areas of Concern:

 

This budget is very important after the global pandemic, which ransomed the entire global economic scenario along with other aspects of the russia-Ukraine war and, after the effect of the pandemic, economic slowdown and relative unemployment.

 

If this budget gives a balanced boost to the required economic driver, it will revive economic growth which will help narrow down unemployment rate.

Read More: http://financial-planet.blogspot.com/2023/01/save-money-for-safe-future.html

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

How to Prepare for the recession coming in 2023?

Recession: Recession is an economic slowdown in a region or country, or sometimes it is global, which contracts across many months or even years. which result in a drastic increase in the value of the country's total GDP (gross domestic product), which is the total value of goods and services the country produces.

In this period, people get to feel sudden inflation in commodity prices more than actual inflation rates. Due to this, they feel financial crunches and crises, which result in a sudden decline in people's buying of commodities. So cash flow declines, resulting in the partial or complete shutdown of many businesses, which leads to increased unemployment.We last experienced the global recession of 2008, which lasted for a couple of years.Now, due to the global pandemic of the coronavirus in 2019, which had a negative impact on worldwide businesses like tourism, construction, airlines, manufacturing, oil and gas extraction, etc., this is resulting in a 2023 recession.

This sounds like a very unpleasant phase of any individual's financial life. But like a famous saying goes, if your neighbour lost a job, it's a recession; if it happens to you, then it's a depression.

So, We Are Giving a Few Tips to Keep Away from Recession and Depression in 2023. Here We Go.

1) Check your financial position:Sit down with pen and paper or an Excel sheet... Analyze a few parameters, like personal assets, liabilities, income statistics, spending, debt-to-income ratio, and your current net worth.By analysing it, you will come to know exactly where you are standing and in which direction you are moving.Based on personal data, you can cut down on expenses. And you will try to find new sources of passive income. So keep yourself floundering seamlessly against all odds that the recession brings.

2) Build your emergency fund: An emergency fund is a corpus that is equivalent to at least 3–6 months of your entire household expenses, through which you can cover your entire family's expenses in the event you lose your job until you get a new one. In a recessionary period, you have to have this emergency fund, which you should keep increasing by adding to every month, until the recession takes your job or your pay cut.

3) Cut down your daily expenses: You can save some money by cutting back on the services and things you can do without. For example, you can stop monthly subscriptions on magazines, e-magazines, OTT platforms, etc. The major daily expense is traveling. If you use a car for your daily commute, you can opt out and take car sharing or bikes to save a good amount on fuel and maintenance. You can save on electricity usage reductions by using it effectively.

 

4) Upskill yourself: Learn some trending skills like app development, digital marketing, online tutoring, etc. which will help you make additional income.

5) Don't invest for the long term in a high-ticket investment: Recession periods are generally times of correction, which includes price correction along with time correction.Big-ticket investments can attract financial crunches as well as losses due to price corrections. Please wait for an appropriate time for these types of investment decisions. If you have already invested heavily in stocks or real estate, please don't panic and treat it as a long-term investment., your debt-to-income ratio, and your current net worth.By analysing it, you will come to know exactly where you are standing and in which direction you are moving.Based on personal data, you can cut down on expenses. And you will try to find new sources of passive income. So keep yourself floundering seamlessly against all odds that the recession brings.

So, it is well said, Today's crisis holds Tomorrow's success stories. Be it your sucess story with the self deciplane act crafted by you in a today's recession Time.

Happy Fatherhood - with easy financial planning tips

Anyone can be a father, but it takes a lot to become a "dad"

Fatherhood is nature's biggest gift, which you can only realise when it happens to you. It's the utmost joy to hear the word "daddy" from your child. But this divine joy comes with the great responsibility to raise them, fund their education, and get them settled in their lives.

When you are a bachelor, you tend to focus on your own things: travelling, parties , shopping, etc. But as soon as you get married...you plan to have a child within 2-3 years of your marriage, in most cases.

In this period, you can cut down on your bachelorhood things, and start focusing on family, you can avoid eating out many times, unnecessary shopping, parties, etc.; and utilise this fund, making it a decent one till your child's birth. which will keep you worry free so you can focus on your spouse's and your child's health during your wife's pregnancy.

Taking insurance coverage that covers the full delivery expense with pre- and post delivery expenses will be very essential. which will save you a lot of money that would have been spent on your wife's delivery.

Now, the main responsibility starts hereon: make an estimate of your child's upbringing expenses, like food, health checkups, school admissions, university education, etc. If it is around INR 20 lakhs ( 25000 USD ).. you can go for an endowment policy that gives you good returns with tax benefits and gives you premiums periodically that can cater to your child's needs at different stages.

Or you can make different SIPs that give good returns with low risk for different purposes of your child's expenses.

This way, you need not compromise on your child's upbringing and education because of funds, you would be prepared and less worried about discharging your fatherhood responsibilities.

This financial provision should not impact your retirement planning. Otherwise, you would be more stressed out when you were not able to work. Hence, retirement planning should go hand in hand with financial planning for your child.

Six Tips which you can do for your child's better future provision.

   1) You can open a savings account in your child's name, in which you can save some amount every month. which will grow up with your child.

   

 2) Teach your child the importance of saving and investing so that he/she will benefit from knowledge of it at an early stage of life.

3) Don't take any big financial decisions that will hamper your family life. Take very systematic and calculative financial decisions to keep your spouse and children's futures secure.

   

 4) You can take advantage of compounding for your child by investing in equity funds. But the investment terms should be long to gain maximum returns for your child. If CSGR is 15% per annum on average, which is normal, then on 15-20 years of investment, your investment turns into a big corpus for your child.

5) Review all investment plans regarding your child  against inflation and upgrade whenever it is necessary or as suggested by your financial planner.

    

6) Take term life insurance for a sufficient amount, say  INR 1 crs ( 125000 USD) , which will work like your financial replica, when, unfortunately, you are no more. The insurance coverage amount will provide your spouse and children with the same lifestyle that you would love to provide for your family.

Financial planning is an important aspect of your child's upbringing and will help you reduce the financial burden on you and discharge your responsibilities for their upbringing with ease. which will transform you from just being a father to a loving dad for your child.

Happy Parenting with easy Tips to follow..!!

Don't Let "FOMO" eat your personal finance Goals.

FOMO is an abbreviation of "fear of missing out." As the name suggests, you will always feel like if you don't do it, you are not keeping up with your fellow socialites.

Here are a few questions we get to hear more often:

1) Someone has taken the latest iPhone, when do you plan to replace it?

2) Someone has taken the latest car. When are you planning?

3) Some friends went to some locations last weekend, when are you going?

4) Some big concert is happening in the city, everyone is buying tickets. When are you buying?

5) Someone's Got Nice Diamond Jewelry; when are you buying?

6) Someone just returned from "once in a lifetime" kind of travel. When are you planning for such?

7) Someone had a lavish marriage or bachelor party, when would you have one?

To fulfil such FOMO desires, one needs to dig into personal savings or take on debt, which is called FOMO debt and is rampantly rising.

Most people in the age group of 21 to 36, called "millennials," are prone to succumbing to it.

And in this age group, people have either just started earning or are up to midlife and are earning well. who likely have social influence over them.

Reasons for being under pressure for overspending due to FOMO.

1) Sometimes they feel ashamed to accept, so they can't afford it and spend it, which puts them in debt.

2) Sometimes they fear being treated as outsiders, so they feel pressure to be included in the activity, which they can't afford.

3) Millenials also feel fear about not being invited to future activities.

4) Some millenials feel social pressure, so they try to keep up with the activities they can't afford.

5) Some millenials have a fear of being judged for not participating in an activity they cannot afford.

6) And Lastly, Some Millenials have a fear of losing friends by not participating in the activities that they really can't afford.

FOMO gets millenials into triggered anxiety for unnecessary spending in order to keep up with other peers' spending, which leads to either poor investment choices that burn savings or compulsive unnecessary debt.

In today's time, there are tonnes of offers running on different shopping portals, with different banks providing easy financing without any documents. which adds up to temptation going into finance, but generally it is at higher interest rates as it doesn't require any collateral. But eventually it leads into the FOMO debt trap.

For instance, travel causes 59% of all FOMO. If you’ve even been on a travel booking website, you might have noticed that FOMO tactics are everywhere!

29% of all FOMO is caused by fashion and jewellery, which cause FOMO almost every day due to social media.

Rest comes from cars and phones with their new launches, events, blogs, and advertisements.

How to Overcome FOMO:

Whenever you feel a situation like this, always consult with your family members to see whether this spending decision is really necessary, If they also have some problems deciding it, just take the help of a professional financial advisor who can give a rational budgeting plan for it. This way, you can protect yourself from unnecessary FOMO spending that blows your personal finance goals.

Read More: 

http://financial-planet.blogspot.com/2023/01/start-personal-finance-planning-right.html

4 thumb Rules For Taking Home Loan

Dear Readers,

Home Loan is very Important segment in an individual's personal financial budget. In India, Real estate Investments are considered to be the safest one along with emotional decisions to many Indians.

Recently RBI has decreased interest rate, so people can get Home loan at cheaper rate around 7 % to 7.30% P.A through Various financial institutions.

Here, are 4 most Important guidelines while taking Home loan which are Important to keep financial health good.

1) Price of House:  The Most Important thumb rule is deciding budget of your house which you plan to purchase.

The price of house Should not exceed 5 times of your annual salary that means if you have annual salary of 10 lakhs you should not go for property pricing more than 50 lakhs.

2) 35/50 rule:   EMI amount should not be more than 35% of your Home Loan EMI.

And Total EMI amount should not be more than 50% of your combined all EMIs and credit cards expense.

So rest you can save for your family expenses and for long term goals.

3) Credit Score: The Highest credit score helps you to give a good deal from banks on Home loan interest.

Credit Score above 750 is considered to be good by banks for lending.

4) Take Shorter loan Duration: 

EMI per lakh will be higher For shorter period,  but just paying little high EMI, you can save lot on interest.

So Try to go for 12-15 years duration rather than going for 20-25 years duration.

Hope, You all follow these thumb rules when you buy property on home loan.

Health Insurance - For better financial health too.

As Medical Expenses ever rising, along with toxic lifestyle most of the people sporting, and also ever increasing pollution level adds up pressure on the general Health. resulting in a sudden hospitalisation or brief stay in the hospital for the major treatments or surgeries. which turns into another nightmare, due to hefty treatment costs.

This adds to the stress of arranging funds, which was unexpected and can make a complete drain on your savings as a whole, shifting focus from your or your loved ones' health to a financial crunch.

 

 

The solution to this problem is to have a health insurance from the right insurer.

 

1) Dealing with an emergency health crisis: If you or someone in your family has incurred a health emergency, getting emergency hospitalisation and high quality healthcare services is most needed. If you have a health policy from the best insurer, you are only required to focus on your own or your family members' health recovery. Rest assured that your health insurer will take care of everything, right from the ambulance ( road or air), hospital cost, medicine cost, ventilator, and anesthesia, whichever is required for the treatment. In this scenario, you can relax and stop bothering for monetary reasons rather than health recovery.

 

2) Safeguard for your personal finances: I have seen many families suffer medical emergencies for which they had to pay, no matter whether they had the necessary funds or not. Once they begin treatment, the hospital issues them hefty bills, which drain out their entire savings, or sometimes they have to take a loan from their bank or relatives to pay the bill. In some big cases, they had to sell off their property just to pay medical expenses.

To avoid such circumstances, you should have health insurance for your entire family, but not with an insufficient cover of 5-10 lakhs; I recommend that you have a total family coverage of 50 lakhs. which will not let you in such a helpless situation in your already trying times.

 

3) Tax benefit: Under Section 80D of the Income Tax Act of 1961, a tax waiver is available on premiums for health insurance.

 

There are many good health insurance providers available with good service ratings.

 

* Star Health Insurance

* Aditya Birla Health Insurance

* ICICI Lombard Health Insurance

* Reliance Health Insurance

* Bajaj Allainz Health Insurance

* Niva Bupa Health Insurance

* Care Health Insurance

 

For example, you can get 5 lakhs of coverage for as little as INR 300 per month.

 

Senior Citizen Health Insurance: 

Senior citizens, who are elderly people, are very prone to getting exposed to illness, lifestyle diseases as their age increases. Hence, health coverage policies for them are a bit expensive compared to regular policies. Generally, people between the ages of 56 and 80 Years are covered under senior citizen health insurance.

 

Cheapest health insurance for senior citizens in India:

 

* Star Health Red Carpet

* National Insurance: Varishtha Mediclaim

* Bajaj Allianz Silver Health

* Oriental Insurance Hope

* New Indian Assurance Health Insurance.

 

 Checklist for choosing the right senior citizens' health policies:

*  Coverage of a sufficient amount : First, just analyse your family's medical history and your own budget. But it is always suggested to go for bigger coverage so that expenses in big medical emergencies can be covered without hurting your financial health.

 

* Lowest waiting period:

 

This is also an important aspect to consider when choosing a policy for senior citizens.

Senior Citizens often have pre existing ailments, but insurance providers do not cover those expenses until after a certain waiting period.

You should do your own research online, there are many good portals that allow you to compare different companies' health insurance policies to choose from.

You should choose a policy wisely that gives the lowest waiting period for pre existing ailments.

 

 

*Network Coverage:

This is also an important aspect, as your insurance providers should have a good network of hospitals with the best healthcare facilities right near your residence, native place, or most probable travel destinations. You should check network hospitals' details and their ratings before zeroing in on a policy.

 

Health insurance is the best gift you can give yourself or your loved ones. Choose wisely, to protect your and your loved ones' health and your financial health as well.

 

After all, health is wealth.

 

Read Also: http://financial-planet.blogspot.com/2023/01/start-personal-finance-planning-right.html

Complete Financial Guide on Purchasing car in 2023.

Purchasing a car for you and your family's commute is becoming necessary in today's world. If you are also planning to get one, this article is simply for you.

Car is asset if used for buisness and liability if used for personal use. As it has depreciation as it gets old. Car loan is secured loan, so Lender can seize the car once loan amount is not paid. So whenever Going for Purchasing the car, You should study your actual need and the budget precisely.

Thumb Rule to Decide budget of the Car, which is to be purchase should not exceed 50% of Your annual 
Income. For Example you are having annual Income of 20 lakhs, you should go for a car price of maximum 10 lakhs.

It is very Important to go for a budget as per own comfortable budget, one should not go just because of some other of your colleague or friend having this car, or just tempted by its features or advertisement campaigns. Or Just by getting influenced by swanky showrooms, and elite selling agents.

Here, We are Proving all the Tips for your Car purchase.

1) As we suggested, First Decide budget of your car, which should be 50% of annual income.

2) Throughly check online about cars, about to lauch, running models, Features, Fuel Type, milage, pri

cing, after sale service and reviews. Like this, you will get 3-4 car models in your shorlisted list.

3) Carry the shortlisted list to the Car showroom, have actual look of the car, take test drive, ask as much quries to the sales agent. Carry some mechanic or technical person along with you, so it would be beneficial to understand technical things in a better way.

4) Don't book imdetiatly, Just Finalize the car model which you wish to go for, and start to see if any discount is upcoming on the same model, may be due to festive season, or due to clearance sell, which generally comes in December month, if you have time, this way you can get INR 30,000/ to INR 1,00,000/ Discount. Simulteniously, Just Look around in your circle for the same car owner for his feedback. Everything must me satisfying till now, You can go and book your dream car.

TIPS for going for car loan:

If Some body ask me the question, Should I purchase the car with own funding or should I go for Car Loan....My answer always remains " Car Loan"

The reason is very simple I tell you, 

In India, Many financial institutions gives car loan at intrest rate of 6.5% to 9% depends upon Individual's cibil score and earnings.

If you have funds available, You can better Invest in secured products like MF or Govt bonds, which on an avarage, pays ranging from 15-18%, which is higher than car loan intrest. This way you can make money if you have fund available with you.

If you are going to avail Loan for your car always follow 20/4/10 rule.

20/4/10 Rule:. In this rule 20% down payment, 4 year tenure, 10 for monthly emi, which should not exceed 10% of your monthly salary.

The intrest paid of your car loan can be claimed under income tax rules.

The Best Car Loan Provider banks are:

1)  SBI:   https://sbi.co.in/web/personal-banking/loans/auto-loans/sbi-new-car-loan-scheme

2) HDFC Bank:. https://v.hdfcbank.com/amp/car-loan/overview.html

3)) ICICI Bank : https://www.icicibank.com/personal-banking/loans/car-loan

Congratulations for your future cars....May this Car shopping journey will be fulfilling and delightful for you.

 

How You Can purchase cheaper property through online auction in India?

Dear Readers,

Buying a property is always a costly affair, which costs a major portion of life's earnings for everyone. And now, post-pandemic (-covid 19 ) there are cash crunch challenges for many families across the Globe.

But, we can make it easier by going to bank auction properties. Here some points are listed below:

Pro:. 

1) All banks auction property are legally safe to purchase as banks have done all the legal process and thoroughly checked all legal aspects by their legal team of panel lawyers.

2) All Auctions properties are legally cleared Through Sarfesi act and Bank DRT.

3) Bank First vacant distress property and take own possesion before starting selling process, which is safe for new buyer.

4) Banks usually sell these properties to recover their dues not to make profits, so pricing points are always 20 to 25% lower than the market price.

5) People are allowed to raise funds from home loans once they have cleared the starting bidding amount.

CONS:

1) Interested buyers need to figure out social maintenance, bills, property taxes, any repairs as the bank doesn't always cover all those things but gives discounts on prices. Most of the time, there is a high probability of taking over the flat from previous distressed fund owners.

2) If a property is very old, there is a high chance of major repair work. The same comes from distressed and least interested owners.

So it is always better to avoid very old property.

Here are 4 trusted websites functioning in online auction:

1) Npasource.com

2) Foreclosureindia.com

3) Bankdrt.com

4) Bank e auctions

You can log in to view properties available through online auction and to know process for purchasing them. 

The leading Bank also publishes property auction details from time to time on their website.

Once you shortlist property, you can apply with your KYC documents and bidding amount which is decided by banks.

All data related to property and auction details is always published on portals.

So, one can participate on a bidding date, whoever place highest bidding,  can buy the property.

These properties are eligible for home loans too.

Banks get the entire process cleared within a 2-3 months timeline. This is how, you can own a cheaper property below 20-25% market price.

Read More: 

http://financial-planet.blogspot.com/2023/01/start-personal-finance-planning-right.html

Start Personal Finance Planning RIGHT AWAY

Dear Readers,

If you are Male or Female, Student or working, Just started your career, or in the middle of your career, You have net worth positive or negative, you are single or married, START TAKING YOUR FINANCES SERIOUSLY, start Personal finance management If you want to retire gracefully without financial crunch, or you have to work for money until the time you die.

If you are a student with education loan, Just started your career…you may be having 8-10 lakhs negative net worth…but need not worry, it was unavoidable liability which you have taken for education purpose. You can just finish it up early, wisely…Most of the banks gives Moratorium period up to 1 year after getting Degrees. You can use this period to pay maximum amount, which will cut down on loan's interest so that, you can lower your EMis once your “paying tenure” actual starts.

If you have taken a Job as a fresher on comparatively less salary, First Upscale yourself with better paying skills in the current Market.

This way You can have better negotiation with your current or new employer with up to 50% salary hikes.

Using this difference amount, you can volunteer pay every month extra amount apart from EMI to make yourself loan free at early stage of your career. Then you can plan for wealth creation by investing.

If you are single, then start investing from early stage of your life, you will get maximum benefit for being in the market from early. The basic formula for investing is, you should invest at least 20% of your income every month. If you start early, you will surprise to see your returns by compounding.

It is Famous to say," some one in the shade because someone had planted a Tree long ago.

So, we should think about it and start investing at the earliest.

IF YOU ARE MARRIED, then first thing, you should discuss with your spouse about your assets, liabilities and your financial goal (short and long term), and you should come on a common page first, then you Jointly can make a Personal Finance Plan, which will be more effective in terms of execution and result.

Both of Husband and Wife, If both are earning, calculate the joint household income, Cut down on unnecessary expenses by simply making list expenses as AVOIDABLE and UNAVOIDABLE. So, it will result in cutting down monthly expense. You can take help of many good expense tracker, personal finance Apps available. In this way, you can save entire salary of one of the spouses, which you can use for Investment in diversify blue-chip stocks, Index Funds, Mutual Funds or other good paying assets jointly. It will create wonders, make them financial free even way before their retirement.

Folks, I am giving reference of Amitabh Bachchan starer Bollywood movie" Baghbaan”, for understanding importance of proper financial planning in a better way, In movie, Amitabh Bachchan was shown retired person from bank, but due to some reason or lack of financial Planning, He and his wife were entirely dependent on their children and had to live separately which is not good situation.

So Readers, Start financial planning right away, no matter in which net worth you are. 

Please, Like and share this article, and comment any unique idea you have for better Financial planning. Bye…Take care…!!