Budgeting
October 6, 2010
By Robert J Barbera | As children grow, they show a sense of independence and eventually will understand money and its relationship to acquiring what they desire. From a very young age they want things from necessities to luxuries.
Parents will introduce them to the ground rules, along with concepts like “allowances” and “budgets”. Household chores have new meaning to children when they understand that chores are, in addition to being a responsible part of the family, a means to acquiring the things they want. As the child becomes more responsible, parents should help them establish a budget for areas in which they wish to spend money on their own. Through this mundane practice, a child grows into an adult who can be responsible with money and budgets.
The child’s budget is set at a limit. If they choose to spend a weekly allowance in two days on candy or a video game, they need to understand that there is no more money available the rest of the week. If the child wants to borrow on next weeks allowance, it must be paid back next week. If the parent doesn’t hold the line and becomes an enabler to poor choices, they lose the opportunity to use the budget as an excellent training tool.
Pity the child trying to understand responsible budgeting from today’s headlines. The excesses of adults and governments, and their ignoring of basic budgetary rules, must surely confuse a child trying to understand the responsible handling of money. The child who is forced to live within his weekly budget and forego immediate gratification of spending urges, is understandably befuddled by the excesses of adults and goverment.
Temptations to overspend, whether on candy for a child or give-away and bailout programs for adults and governments, are always around us. Unfortunately, the federal and many states governments have engaged in grossly irresponsible budgeting. Many individuals have given new meaning to “greedy”. Decades of borrowing more and more money to buy more and more goods and services beyond our budgets have finally put our economy in chaos.
Many Economists, bankers and elected officials seem to think that an endless stream of “new” money can cure our overspending, However printing or borrowing more money simply takes us from a temporary problem –a cash short fall- to more lasting one-long term inflation.
Government doe not earn money from productivity or services. It either prints it or borrows it. The government pays debt by taxation or printing more money. Sadly, the “in vogue” answer to the current crisis seems to be a redistribution of wealth from those kept to their budgets to those who did not keep to their budget. It is a truism that when you reward a particular behavior you inevitably get more of it. Sadly, we are rewarding grossly irresponsible economic behavior. More of the same is that last thing we need.