Maharashtra Board Class 9 Maths Part I Chapter 6 Financial Planning PDF Download

Financial Planning

Anagha: Shall we buy computer?

Mother: Ok, let's buy it next year.

Anagha: Mamma, why not now?

Mother: Anagha, you don't know how expensive it is!

Anagha: You mean we will have to save up for it, right?

Mother: Yes, that's the thing.

We often hear such conversations.

Everyone requires money to meet a variety of needs. That is why after spending on the necessities of the present, everyone tries to save money to make provisions for the future needs. That is what we call 'Saving' money. In order to protect our savings or even to make them grow, we keep them as fixed deposits or buy immovable properties such as a house, land etc. That is what we call 'investment'.

Every investor first spends the amount required to meet primary necessities and saves the remaining amount. One also uses these savings to make a carefully considered investments. This is called financial planning. The main purpose of financial planning is protection and growth of the wealth.

Financial planning is useful for making provisions for the predictable and unpredictable expenses that each of us has to meet in our life.

The above considerations make it quite clear why financial planning is a must. However some important points must be kept in mind as we plan our finances.

Teacher's Note

Financial planning helps families like yours save money for important things like education and a house. In India, many families save money in banks or post offices to buy things later.

Exam Trick

Remember: Save = Keep money safe. Invest = Make money grow. Think of it like planting a seed that becomes a tree.

Points to Remember

Saving means putting money away for future needs.
Investment means putting money into schemes to make it grow.
Financial planning helps protect your money and your family's future.
There are predictable expenses like education and unpredictable expenses like accidents.
Everyone should plan their spending and savings carefully.

Savings and Investments

Savings

It is for our own benefit to keep our savings safe and to make them grow. Our savings remain safe in a bank or in a post office. Money saved in a bank is also useful for cashless transactions. This way, we do not have to carry large amounts of cash or worry about losing it or getting it stolen.

If the money we get or earn is in the form of cash and we keep it as it is, without investing it, its value diminishes with time. For example, if today you can buy two pencils for ten rupees, a few years hence, you may be able to buy only one for that amount.

If the amount invested is used for expanding a business, to start an industry or other such purposes, it contributes to the growth of the national production.

If some part of the income is spent for a socially useful cause everyone benefits from it in the long run.

After spending on necessities it is beneficial to limit spending on luxuries and to save, instead for education, medical treatment etc.

Teacher's Note

Keeping money in a bank keeps it safe from theft. In India, many people use bank accounts like Pradhan Mantri Jan Dhan Yojana to save money safely.

Exam Trick

Remember: Bank = Safe place for money. Your money grows with interest, like a plant growing bigger in good soil.

Points to Remember

Banks keep your money safe and secure.
Money loses value if you just keep it as cash at home.
Investing money helps businesses and industries grow.
Savings used for good causes help society.
It is good to save money instead of spending on luxuries.

Investments

Investments are of many types. Investors often favour institutions like banks and postal departments for investing their money because it is safe there. There is a certain risk in investing money in shares, mutual funds, etc. That is because this money is invested in a business or industry and if that incurs a loss, the investor suffers the loss too. On the other hand, if it makes a profit the money is safe and there is the opportunity to get a dividend too.

An investor must take two important points into account when making an investment namely the risk and the gain. It is possible to make big gains by taking greater risk. However it must be kept in mind that the greater risk can also lead to greater loss.

Teacher's Note

Some investments like bank deposits are very safe but give less profit. Other investments like shares can give more profit but have more risk. Choose wisely!

Exam Trick

Remember: More risk = More possible profit but also more possible loss. Like crossing a busy road quickly is risky but faster.

Points to Remember

Banks and post offices are safe places to invest money.
Shares and mutual funds have more risk but can give more profit.
Every investment has some risk and some possible gain.
Smart investors think about both risk and profit.
Never invest all your money in just one type of investment.

This is a preview of the first 3 pages. To get the complete book, click below.