Is It Really So Complicated?

After reading more and more about our “fiscal cliff”, I can’t help but scratch my head and wonder… Is it really so complicated?

Are budgets at any level really so complicated? The answer seems fairly simple, right?  Or is it, since we begin in the right place with personal finances, groups, associations, organizations, etc?  Seemingly everywhere but government. 

When teaching children about money, how many of us begin with “buy what you want, then hope you have enough income, and if not, borrow the difference?”  If you do, there may be some government-like problems when you finish.  We start by putting a number representing income and making a list of things we must set aside money for. 

While I admit the following comparisons in general are overly simple, they are meant only to have us think in everyday terms about what is going on. 

Let’s take a look at our “needs”,  or things we must have such as food, lodging, transportation and so on.   This list should not include loaning money to neighbors, risky investments,  or paying for your co-worker’s past due bills when he chooses to invest every dime he has unwisely.  These are the items we will build our budget around.  We must choose “needs” that fit our income.  Obviously, if our net income is 5k monthly, we cannot spend 4k on our housing.

Our government has made some mistakes we should avoid, thus a large amount of debt has piled up and continues to grow.  We have loaned billions to other countries (neighbors) for a variety of  reasons.  The problem is we have essentially loaned borrowed money for too long.  Millions upon millions of tax dollars have been spent (risky investments) on “green energy” companies.  Great idea until they filed bankruptcy and/or were bought by foreign businesses.  Bailing out every big business (co-worker’s bills) who has a difficult time or makes risky decisions is not a safe way to handle your budget either.  We have not lived “within our means” as a country for sometime.

And now to the wants.  Things that aren’t necessary for survival, but we enjoy.  Vacations, movies, a 52 inch flat screen tv.  You get the picture, I’m sure.  When all bills are paid, giving is done, savings needs met, we can then spend money on something we want.  One of the keys to this being last on the priorities list, is not promising others things we may not be able to afford.  Things come up (car and/or home repairs, medical bills, etc.) and while we try to prepare for all possibilities there are times we have to spend the “want” portion of our budget on “needs”.  We don’t decide not to pay the electric bill in order to buy the video game we promised our child.

Our government, in many cases, works from the middle out or bottom up with regard to priorities.  Many times the decisions to spend (which happens a lot) or cut (which doesn’t happen much) depends on political promises rather than what is truly best for our country.  There are always good reasons for choosing to spend tax dollars (if you ask the person or group electing to spend it) for one thing or another.  We just need a better working budget in order to properly prioritize.  The problem seems to be a lack of willingness to put the “needs” before the “wants”. 



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