![]() The low income of a struggling poet is likely well below the poverty line. Choose the goal of living a fulfilled life rather than the highest income. A budget is your chance to cut deadweight loss out of your life. ![]() ![]() This expense is almost entirely a deadweight loss that would be completely avoidable if Congress made and stuck to a budget in line with our values. Yet every year the federal government spends at least that amount via the Bureau of Indian Affairs. Most Americans would not spend $8 million promoting self-sufficiency in Native Americans. A similar loss occurs when people spend without or outside of a budget. At Christmastime economists call it a deadweight loss when gift givers pay more than the recipient of the gift would have paid. Going into debt by purchasing items you didn't want as much as the price you paid for them is a common financial mistake. If like the federal government you don't stick with the budget, you are just as bad off as if you didn't have a budget in the first place. Without a budget, either every purchase is a chore or you're vulnerable to excessive spending. This is particularly sad because budgets are how we allocate our income to the things we value. Many families don't know what their income is, few keep a budget and even fewer know how much they spend in a year. Although the corporate world handles the idea of cash flow fairly well, both the federal government and most households sorely lack this knowledge.
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