Wednesday, January 27, 2010

A Personal Finance Perspective on the U.S. Budget

It's challenging for me to get a good feel of what changes to the U.S budget means, because I don't normally work in billions and trillions of dollars. To get a better understanding, I decided to loosely translate the 2010 U.S. Budget, deficit and proposed spending freeze by President Obama into a hypothetical person Ima Spending. Scaling to U.S. budget to an individual level, here is my estimate of Ima's financial position:

Annual Income: $23,000

Annual Spending: $35,000

Annual increase in Debt: $12,000

Annual savings from Spending Freeze: $250

From my perspective, Ima needs more revenue, less spending or both. Since increased revenue is not easy in today's economy, I would work on reducing spending. Unfortunately, a spending freeze does not offer a noticeable reduction.

I'm glad I did the calculations to reduce the numbers to an individual level. Thinking in terms of thousands, instead of billions and trillions, have helped me understand the U.S. budget issues a little better ;-)

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial or policy advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC

No comments: