Brie Hoffman (author) from Manhattan on December 23, 2010: Not having a balanced budget is against the will of- We The People. The best approach is to ask ourselves why a balanced budget is important. Your budget creates a plan and lets you track it to make sure you are reaching your goals. Of course it is never too late for reading an interesting hub. Until we balance the budget we will always keep adding to the debt. That is a philosophical, not an accounting, question. My answer is a definite no. Similarly a country will run smoothly with a balance budget as you rightly pointed out in the hub. But in a democracy, the budget of the states depends upon the policy of the government. German 10 year bond yields are at record lows of 0.82%. If we could accomplish this, compliance would go up and we would have more money to balance the budget and less people seeking loopholes. The hysteria about the debt is just that. Here are a few reasons why it’s important for the government to have a budget: Proper resource pool allocation When it comes to budgeting, identifying areas of weakness helps the government to allocate resources in a useful and sustainable manner. The amount is inconceivable! More generally, it is a budget that has no budget deficit, but could possibly have a budget surplus. It's the debt that is problematic. They will not be forced to make difficult decisions and therefore will not make them. The restriction of having to balance the budget keeps the country (like individuals) from overspending, the absence of a balanced budget enables congress to fund pet projects and black ops without the intense scrutiny of the public and finally having a balanced budget will diminish and eventually remove the huge deficit hanging over the country. I fear it is far too late. But, ending its false commitment to a balanced budget could be an important step. There are many reasons that budgeting is important. Creating a budget has always been important, whether for single people or families, but in times of tough economic issues when there is not a lot of job security, it is even more important. Question: Should non-profit budgets be balanced or do they need to show a net positive? Brie Hoffman (author) from Manhattan on December 17, 2010: Unfortunately we no longer have a democracy in this country, we had a coup but it didn't make the 6:00 news. They have also known fro decades that Medicare would need adjustments as baby-boomers began to retire. Therefore, working with as much knowledge as possible is an invaluable asset for any company. A balanced budget is a budget in which revenues are equal to expenditures. It is accurate and true to the best of the author’s knowledge and should not be substituted for impartial fact or advice in legal, political, or personal matters. A balanced budget is achieved by comparing your current income to your expenses and ensuring that the amount you spend does not exceed the amount you make. I don't think most people can fathom that monetary amount. This in turn will cause social strife and possibly the threat of civil or international war as the younger generation will be forced to carry more and more of the tax burden while benefiting less and less and the risk of defaulting with our creditors looms. 2  As noted above, the main advantage to a balanced budget is that you avoid incurring debt to pay your bills. Those benefits have to be paid regardless of the budget availability. So it requires expert. This content reflects the personal opinions of the author. Now have we spent too much money? Washington doesn't seem competent. In turn, you will possess less outstanding debt and have a lower risk of bankruptcy. Another important benefit of a household budget is that it can alert you against possible cash flow problems in the future. Limited Funds. Allows You to Catch Errors EarlyWhen you balance your budget regularly, you are more likely to catch banking errors or other financial errors that may work against you. A budget is a plan that helps you prioritize your spending. All lending decisions are determined by the lender and we do not guarantee approval, rates or terms for any lender or loan program. Balanced teams are accountable and have clear separations of responsibilities. I'm afraid many people confuse the two. And that is only National dept, what about state depts (Illinois..)? But we need to prioritize what is really important in this country," she said. A Balanced Fund Provides the Best of All Possible Worlds, Maintaining the Health of Your Balanced Portfolio, Special Reasons to Avoid a Balanced Portfolio, Subscribe to news about Financial Planning, Start Up Business Tips: 3 Ways to Get Financing, Choosing between Money Market Accounts and CDs, Business Start Up Help: 4 Reasons to Form an LLC. The key to properly managing the finances of a nonprofit organization is proper planning and continual oversight. Reduces StressWhen you balance your budget, you know exactly how much disposable income you have to spend each month. If they don't balance and you spend. Only to cover the legal budget, taxes would have to doubled. Instead of mom and dad telling you that meal out is too expensive, your budget tells you that the extra $25 is too much to stay on track financially. The point of a zero-based budget is to make income minus the outgo equal zero. Users are encouraged to use their best judgment in evaluating any third party services or advertisers on this site before submitting any information to any third party. At the present time our national deficit is over 19 Trillion dollars and rising! We have to ask ourselves who is benefiting from this debt. Brie Hoffman (author) from Manhattan on February 01, 2011: But: with 14 Trillon of accumulated dept and a deficit of lets say 1 Trillion per year i tend to say: we do have a balanced budget, only forgot to count the interest rate for the 14 Trillion. It is a financial analysis of a specific period, generally, a year that helps to determine that the firm has enough monetary resources to … Balancing the … We are in big trouble and it's not something that will happen down the road, it is happening now. Everyone from individual families to the federal government use budgets to track their financial needs and account for revenue and expenditures over time. A BBA would hurt the economy even if it tries to account for recessions. Brie Hoffman (author) from Manhattan on June 09, 2011: They don't want to decrease the debt because they are profiting from it. Arguments for the Balanced Budget Amendment . Some states have two or all three of the possible balanced-budget requirements, and a few have only a statutory requirement that the governor submit a balanced budget. Great article, voted up. more than you make, you will have a problem. And, all of it started because we did not hold politicians feet to the fire and make them balance the budget. This shows that European investors want to buy German bonds and they fear an economic slowdown. If the months of June, July, August, and December typically generate 75% of your business' revenue, your budget will allow you to plan ahead. I am being told they need to show a net positive (i.e. Without a budgeted balance sheet company management cannot forecast the future financial health of the organization. not balanced) for certain grants to consider us. When you budget, you’re doing something with your money before it’s gone. The content on this site is provided for informational purposes only and is not legal or professional advice. I have … Budgeting is Important because it is a method to achieve the set goals and objectives of a firm by effectively utilizing its resources. In 2011, the House passed a … Brie Hoffman (author) from Manhattan on December 16, 2010: I agree with every word. Moving beyond these misconceptions is an important step in being able to recognize the many ways that policymakers manipulate state finances to “balance” budgets and put an end to the growth of state debt. One reason economists caution against taking drastic measures to balance the budget is the impact it would have on the economy. Teaches Debt Management SkillsYour debt management skills determine how you balance your debts with your income. By not enforcing a balanced budget hard decisions are not made and never will be made. If the team of expert fails to do its function, the people will suffer. For many concerned citizens the reason budgets should be balanced is to avoid imposing harm on future residents, especially the next generation. The present debt came as no surprise. That isn't to say the problems don't need to be tackled, but the urgency that says it's necessary right now is sheer fallacy. Advocates of a balanced budget amendment say the federal government spends too much every year. One of the key starting points is running balanced budgets – an idea that Macdonald-Laurier Institute Managing Director Brian Lee Crowley outlined in his book The Canadian Century. Once. Because every penny is not accounted for, waste is rampant and fraud all too common. When people are hurting, it is our job to take care of them. Thus, neither a budget deficit nor a budget surplus exists. It may be getting out of debt, saving up for a home, or working on starting your own business. They will leave them to the next guy who will do the same until disaster overcomes us. The act of budgeting teaches proper debt management and helps you avoid the unpleasant consequence of relying too heavily on credit cards and loans to pay your bills. A budget can be considered balanced after a full year of revenues and … You must tell that 500 bucks where to go. The picture is of 15 Trillion dollars by stacking 100 dollar bills. Ultimately it is the people who are to do the balanced budget. They say that Congress has been unable to control spending without some kind of restraint and that, if spending is not controlled, our economy will suffer and our standard of living will drop. Money doesn’t have to make the world go round, but when we are better at budgeting, it helps make the world a better place. Germany is not facing a bond crisis with rising bond yields. And finally not having a balanced budget contributes to the enormous deficit, which will in turn cause steep tax rates in order to pay for the deficit, which in turn will cause slavery. Of the public purse concerned citizens the reason budgets should be fair and not by.! That it can alert you against possible cash flow problems in the future to ask ourselves who benefiting. Another important benefit of a balanced budget is a plan that helps you meet financial. Legal budget, taxes would have to ask ourselves who is benefiting from this debt that! To do, instead of the organization Fudge asked, resulting in Antarctic... Could be an important step undue burden take the easy road and cater to whatever will get elected! Knowledge as possible is an invaluable asset for any company to balance budget... 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