Arjuna: Krishna, the Union Budget will be presented soon, and everyone is eagerly waiting for the finance minister's announcements. But why do people place so much importance on the budget? Does it really impact an individual's financial planning?
Krishna: Arjuna, the Union Budget is like a blueprint for the country's financial future. It not only outlines the government's plans for revenue and expenditure but also directly impacts taxpayers. Changes in tax slabs, exemptions, duties, and government spending influence both individuals and businesses. Thus, understanding its significance and preparing in advance can make a big difference.
Arjuna: Krishna, please explain the types of budgets.
Krishna: Arjuna, budgets are prepared by everyone, from children to seniors, households to nations, and profit-making entities to non-profit organizations. Broadly, budgets can be categorized based on their uses, such as personal budgets, zero budgets, performance budgets, revenue budgets, capital budgets, and cash budgets. However, we can summarize them into three major types:
1. Family Budget: Focused on managing household income and expenses, ensuring financial stability for the family.
2. Business or Profession Budget: Designed to achieve business goals by setting targets for revenue, expenditure, and profit.
3. Union or State Budget: A government's financial plan to allocate resources for the development and welfare of the nation or state.
Arjuna: Krishna, but why should an individual prepare a family budget?
Krishna: Arjuna, in today's fast-paced and technology-driven world, where both men and women are earning, financial planning is essential for every household. Families need to plan for routine and non-routine expenses such as children's education, insurance premiums, investments, EMIs for homes or cars, and travel costs. Additionally, our changing lifestyles have brought increased spending on dining out and hospitality. This makes proper budgeting a necessity to ensure financial stability. A well-prepared annual budget, divided into monthly plans, helps families monitor their income and expenses effectively. By reviewing and adjusting the budget at the end of each month, families can maintain better control over their finances. Moreover, involving children in this process imparts valuable lessons in discipline and financial prudence, shaping their future habits and understanding of money management.
Arjuna: Krishna, what is the importance of a business or profession budget?
Krishna: Arjuna, Every businessman has to prepare a budget in order to accomplish his goal of profit. If he wants progress in his business or profession, then he has to set targets, and for their accomplishment, he has to use techniques. The budget is prepared by considering the previous year's turnover, profit, and expenditure. Capital is required for every business. For running a business or profession, a loan from a bank is required. For this, a projected budget or projected financial has to be prepared. The capability of a business is checked by preparing a budget if a new unit or branch is to be introduced. Small businessmen can achieve their targets by preparing a budget, and they can keep control on the expenditure to be made. Many big companies also prepare their department-wise budgets and encourage the employees to achieve the target.
Arjuna: Krishna, what should one learn from this concept of a budget?
Krishna: Arjuna, living within a particular budget refers to living a balanced life. "Cut your cloth according to your coat" means one should prepare a budget. Expenditure should be made considering the income. A loan should be taken up to a certain extent; otherwise, financial complications may arise. Keeping a budget is the best way to run a home, a business, and a country. An individual many times is worried about the country's budget and business budget and forgets about their own family budget. Most important is the family budget because it can be controlled by us. Whereas others have control over the business budget, the union budget is completely in the hands of the government. Likewise, in terms of growth, if one keeps their own family budget in control, then their business budget, which in turn will help for the growth of themselves as well as of their country.
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