In the office of every broking house, their sub-broker, wealth management firm, asset management company, insurance company or just about anybody who claims to be working in the financial services industry, it is one of these many news channels that make the most noise. It used to be the telephones earlier.
However, a peek into a financial planner’s office was a revelation. No televisions in the office, a bit of frenzied activity, people sipping their coffee cups, thinking deeply and typing away into their laptops. When one of the financial planners was asked what he thought of the budget, he responded with, “Oh yes, the budget is very important. Only out of the budget will we know how much surplus is available to invest for future goals.” That seemed a little far-fetched. When the same question was raised with the Chief financial planner, he looked up from his laptop and said “I care a damn for the budget”.
Huh?! How come? The budget decides how people earn, spend and invest and if a financial planner’s business is clued on to such activities of an individual, how come it doesn’t matter?
Pragmatic answer followed, “What will happen in the budget? Maybe some sops for the salaried class like an increase in permitted 80C deductions or basic exemptions which will put money into my clients’ hands. On the other hand, service tax and excise duty and the like will go up and increase my client’s expenses. What he saves here will go there. Budget is all about taking money from one man’s pocket and putting into another’s.”
That did not sound quite right, because the economy does grow. Keynesian theories of ‘limited resources, unlimited needs’ is outdated. With concerted economic activity, resources do increase. We have seen per capita income going up which means, the means to buy these resources increase too. It is not always the same amount of money doing the rounds.
Some people do make and save more than the others. Pat came the answer, “fair enough, but that is economic activity not necessarily fiscal.” Then he made a rather rude remark, “Economic growth in our country happens in spite of the government and not really because of it”. To think of it, though it did not sound pleasing to the ear, there was an element of truth to it.
The impact of budgets would at best be short term. Ultimately, we will all figure out how to live and make merry with whatever we have. If we want to borrow and face the music we would do that too. Our fate is a result of our behavior and financial planning believes in changing behaviors and taking charge of our lives and destiny. Markets don’t matter, budgets don’t either. If time tested financial planning principles are followed with discipline every one of us, would live the life of our dreams. Maybe it is just a great idea to look out of the window rather than at the television. Think about it.
Or better take a walk out and meet your personal finance planner and put your personal plan into action. Let your planner do the budget watching while you take a hard earned break! Think about it!