Question

share any parallels you find between the budgeting of the Government and that of an individual or family (connection between sources and spending, balancing, use of debt) in US.

Answer 1

Individual and government budgeting are more different than alike. Budgeting within an individual is more flexible and less restrictive than budgets used in governments. Here are some of the ways in which government and individual budgets differ:

· Government budgeting is preoccupied with allocating scarce resources among many competing demands. From federal agencies down to local school districts, government entities have only so much revenue available. They have to make very difficult choices regarding how to spend their limited tax revenue.

Formal budgeting is legally required for almost all government entities. First, a budget request is submitted. After money is appropriated, the budget document becomes legally binding on the government agency.

Government budgets are legal straitjackets; the government entity has to stay within the amounts appropriated for each expenditure category. Any changes from the established budgets need formal approval and are difficult to get through the system.

Individual budgeting is not legally required. A business can implement band use its budget as it pleases, and it can even abandon its budget in midstream. Unlike the government, the revenue of a business is not constrained; a business can do many things to increase sales revenue.

A business can pass its costs to its customers in the sales prices it charges. In contrast, government has to raise taxes to spend more.

Government spending covers a range of services provided by the federal, state, and local governments. When the federal government spends more money than it receives in taxes in a given year, it runs a budget deficit. Conversely, when the government receives more money in taxes than it spends in a year, it runs a budget surplus. If government spending and taxes are equal, it is said to have a balanced budget. For example, in 2009, the U.S. government experienced its largest budget deficit ever, as the federal government spent $1.4 trillion more than it collected in taxes. This deficit was about 10% of the size of the U.S. GDP in 2009, making it by far the largest budget deficit relative to GDP since the mammoth borrowing used to finance World War II.

living expenses. They include the amount paid for lodging, food consumed within the home, utilities paid, and other costs. The sum of all the expenses is then divided by the number of family members residing in the house in order to find each member's share of the total expense.

Some household expenses qualify for tax deductions. For example, if you work from home and have an office there, you might qualify for the home office deduction.

Understanding Household Expenses

If you have "head of household" status, you can enjoy a larger standard deduction and lower tax rates. The items associated with household expenses include a broad range of recurring purchases.

Types of Household Expenses

Home Expenses

In addition to the cost of the housing, whether it is rent, a mortgage payment, or real estate taxes, fees for utilities such as electricity and gas as well as insurance for the property are also part of household expenses.

The needs of each person accounted for in the household also fall under these costs. These needs include the cost of prescription medicines and other healthcare fees.

Child-Related Expenses

Expenditures for education such as tutoring services, the purchase, and maintenance of school uniforms, textbooks, personal computers, stationery, and pens are all included as household expenses. Tuition, whether for private schools or universities, may be included as expenses carried by the household because the student typically relies on a parent or guardian to pay such fees.

Childcare services, such as hiring babysitters or paying for daycare for young children while parents are at work, are included in household expenses as well.

Transportation Expenses

Transportation fees, such as the cost of leasing or buying a car through installment payments, commuting costs to work, and other services used by members of the household to get around, such as taxis or buses, can be counted as expenses to the household. Legal fees for members of a household, whether for consulting services or litigation, may also be included as well.

Entertainment Expenses

Costs for leisure and pastimes might be part of a household's regular expenditures. Nights out to the movies or subscription television services are part of entertainment purchases for the household.

The money spent on vacations, costs to participate in hobbies such as procuring collectible items, and fees for club memberships also add to these expenses. However, the necessity of such expenditures may come into question when budgeting to maintain the necessities of a household, particularly if there is a decline in personal income. If household expenses surpass your capacity to pay them, increased debt and more extensive consequences may occur.

The Internal Revenue Service lists the expenses that qualify for a tax deduction. To claim a tax deduction, keep meticulous records and all receipts so that you are ready to fill out the required forms at tax time.

Taxpayer

A taxpayer is an individual or business entity that is obligated to pay taxes to a federal, state, or municipal government body.

Personal Finance

Personal finance is all about managing your personal budget and how to best invest your money to realize your goals.

Qualified Higher Education Expense

A qualified higher education expense is a tax-reducing expense such as tuition and books paid to an eligible post-secondary institution.

Moving Expenses

Moving expenses are potentially tax-deductible costs that are incurred when an individual and their family relocates for a new or existing job.

Autonomous consumption

Autonomous consumption is the minimum level of consumption that exists for basic necessities, such as food and shelter, even if a consumer has zero income.

DEBT

The national debt level of the United States is a measurement of how much the federal government owes its creditors. Specifically the national debt is a term referring to the level of federal debt held by the public, as opposed to the debt held by the government itself. Since the U.S. government almost always spends more than it takes in, the national debt continues to rise.

While the debt can be measured in trillions of dollars, it is usually measured as a percentage of gross domestic product (GDP), the debt-to-GDP ratio. That's because as a country's economy grows, the amount of revenue a government can use to pay its debts grows as well. In addition, a larger economy generally means the country's capital markets will grow and the government can tap them to issue more debt. This means that a country's ability to pay off debt, and the effect that debt might have on the country's economy, is dependent on how large the debt is as a proportion of the overall economy, not the dollar amount.

In today’s economy, massive consumer debt has crippled the personal balance sheets of individuals around the country, making a tough economy even tougher. With foreclosures on the rise and many Americans crippled by over-extended credit cards, personal debt is becoming a major player in the economic crisis.