Personal Finance Blog India –

Material (Rather Money) Balance:

Material balance is used to analyse the physical,mechanical or chemical is used to measure the system efficiency.Balance is more accurate means rate of disappearance is lowest.

Any individual,family,state or country have an economic process and the efficiency is depends upon the  inlet ( income) in the system and outlet (expenses )..We will consider very basic money balance equations.

  • Inlet = Outlet:

For system where income is exactly equal to expenses and liabilities then there won’t be any saving and there won’t be any need of debt either.

  • Inlet<Outlet:

In this case,income will be less than expenses and liabilities..the balance need to be maintained by addition of Debt stream.

To reduce the debt stream its necessary to minimize expense stream..But sometimes liabilities are higher and are must do type.In that scenario, small stream of ‘Doosra Income‘ can reduce the debt stream significantly.

  • Inlet >>Outlet:

Income is higher than expenses and this case accumulation (saving) will be obviously higher.

If anyone have any more money balance equation then why not to comment below…….You can draw one as well….

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