Friday, January 23, 2009

Understanding the budget

One of the most interesting, yet dreadful aspects of governance is the budgeting process.
Government budgeting is one of the most important, yet one of the most controversial processes in the operation of the government.
Many in public policy will say that budgeting is so complicated.
However, there is also a way to simplify our understanding of the budget.
Think of government budgeting, in the way the family does the budgeting.

Family, gov’t budgeting similar
The fundamentals are similar.
In the family, usually the father works to gain income for the family.
When he received his salary he gives income to the wife or mother.
Often the mother is the one who budgets the family income.
The income will be used to pay for the usual expenses of the family.
The mother will then set aside part of the income to put food on the table.
She will set aside part of the income to pay the utilities, like electricity, water bills.
She will set aside money for the children’s education, and their ba-on and transpo fare.
An amount is also set aside to maintain the family motorcycle, or car.
A part of the income will also be set aside to pay for the househelp’s sweldo, if there is one.
If the family has a loan (utang) from the cooperative, or the 5-6 (bombay), then an amount is also set aside for loan payment.
That is family budgeting.

Balancing the budget
What can be difficult for the mother is how to balance the family’s budget.
In other words, the income must be sufficient to cover the regular monthly expenses of the family.
This is the hard part.
So it is important, that the father does not have many vices like smoking, drinking, bulang (cockfighting), mahjong, “good time.”
If the income is channeled to the vices, then all the more, it would be difficult for the mother to balance the budget.
If the income is not sufficient to cover the expenses, the result is what we call “deficit.”
If the father’s income is way too low, that it cannot cover the family expenses, then the father may have to resort to “utang” from lenders and the loansharks or 5-6 (I am not talking about height here).
It is important that there should be “responsible budgeting.”
The idea is to have a “balanced” budget.
One of the most effective ways to maintain a balanced budget is to cut-off on unnecessary expenses, eliminate the vices, and most significant, live simply or “simplified living.”.
Next: Government budgeting.

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