Comparison of Federal and Family Budget
Politicians and other commentators frequently make an uninformed comparison between the federal budget and a family’s or individual’s budget to make their points more understandable. The budget is a structure or document that is used in both situations to plan what to spend, but there are some significant distinctions (Stewart). A family budget is primarily focused on its own financial circumstances, but a government budget aims to support the entire economy.
According to Dr. Risse, “The government spends money and accumulates debt to rebuild opportunities for people’s jobs, expand GDP, create more business confidence in the future, and get the economy rolling again so that it does have the capacity to repay that debt” (Stewart). That is a different situation from households, where people borrow money to pay for a luxury good individuals want to enjoy but do not have the money for.
Creation of Budgets
In its most basic form, a budget compares and plans for income and expenses over a given period. To create a budget, you must deduct expenses from revenue. You have a surplus if you still have cash. A deficit exists if costs are higher than revenue. A balanced budget means that income and expenses are equal.
Personal budgets are those that regular people create to manage their income and expenses (Lake). These budgets are typically simpler than those used by corporations or the government, as there are fewer expenses to keep track of. Various budget strategies may be more effective for different people.
Public vs. Private Budgeting
A more general goal of public budgeting is to offer services to citizens. Private, on the other hand, strives to concentrate on the company’s financial core. Public budgeting has more economic and social effects than private budgeting (Lake). Public budgeting affects more people at various levels of government. Numerous monitoring or regulating organizations keep an eye on and carry out public budgeting (e.g., regulatory agencies inside and outside the organization) (Lake). Compared to private budgeting, the stages of public budgeting preparation are longer and more involved.
Works Cited
Stewart, Emily. “What’s the Difference between the Federal Budget and Your Own Budget at Home?” ABC News, ABC News. 2020. Web.
Lake, Rebecca. “Budgets: Everything You Need to Know.” The Balance, The Balance. 2022. Web.