You can’t keep spending what you do not have or you will go bust |
Article by Margaret Corridan
Author of Brilliant Personal Finances It’s that time again! Time to decide who I want to be in charge of my future. Yes you guessed it ELECTION TIME. The questions on my mind are: 1. Who can you trust? 2. How much do we really understand about what the government does and how it handles our finances? From where I sit it seems to me that all politicians make promises in order to win our vote, but no promise can be kept, no matter how good the intention, unless there is money to make it happen, So how have the successions of governments and civil servants handled our money? I know it is complicated but if we take a very simplistic view we may be able to at least start to think about what we, the taxpayers want to see happen next. Think of the UK as a family household. The Government takes the role of the parents and the rest of us as children in the family. The parents: Set the rules of the household Decide what they think the family needs and how it should behave They earn or borrow the money to buy and provide all of the things they decide the family needs Lets call it ‘Family UK’. Like all parents they want what they think is best for the family, including themselves. They want others to think they are doing well and are prospering in the eyes of the other families in the world. So they have created an illusion of wealth. Just like the family who go on an expensive holiday to South America and pay for it on their credit card but never actually have enough money to pay back the debt, their minimum payments mean they will be paying for the holiday until they die. From the outside they look like they are doing well because no one knows how much debt they are carrying after the memory of the holiday has gone. If you look closely at ‘Family UK’ what do you see? I suspect you will see that ‘Family UK’ is living beyond its means. They have borrowed in order to have the nice hospitals, the super new technology that keeps track of everything and to belong to the expensive club that all of their neighbours belong to. The club that provide a large number of rules that the family must abide by. They give away money they don’t have so that they can be seen as a family who can look after it’s poorer relations in the world and provide handouts for those of their family who can’t or won’t work. ‘Family UK’ have consistently taken out the equivalent of loans and mortgages to support their lifestyle, so now instead of spending all of their income on ‘Family UK’ they are paying a large part to the people they owe money to in interest. Not only that but when the children want to know how much they owe and how long it will take to pay back, the parents don’t seem to be able to work it out…Scary It seems that ‘Family UK’ finds itself in a difficult place. Like all children while things looked good we didn’t ask where did the money come from, now things look tough we are complaining about bad management. So should ‘Family UK’ drop the pride and forget about status in the interest of balancing the family finances or should it continue on the same course and let the next generation take on the full burden of the debt that the parents have created. I for one like stability and uncomplicated decisions. For me stability comes from being in control. In this case being in control starts with balancing the finances and not spending beyond your means. If ‘Family UK’ were a real family, with high debt and interest payments, wanting to bring their finances under control they would do the following. Split the spending items into two parts: 1. Spend you have no choice about. 2. Spend that is discretionary Look at list 2 and cut out as much as is needed to only spend what you earn. Look at list 1 and see if you can change your commitments, just as you may cancel a club subscription when it is time to renew so that you could save money for a while. The trouble with this plan is you will affect the lives of all of your family and the rest of the world. But if you take this approach at least you will have a list of choices that you can put to the family and ask them what they are prepared to do without to get out of the mess. The parents may be surprised at the answers and at least they will have asked. Those of you who know more about government finances and politics may well be shouting at the screen ‘ but it is more complicated than that’ and yes you are right but the principle is still the same. You can’t keep spending what you do not have or you will go bust! So I am still not sure what to do with my vote, but one thing I do know is I will use it. |
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