Yesterday's presentation of Bank IT at PS 124 was so much fun and so
well attended by the kids!!! They impressed me with their intellect,
inquistiveness and curiousity. One of the best (of many )questions of
the day came from a 5th grader who asked WHY IS IT SO DIFFICULT
TO BALANCE A BUDGET? That is an excellent question with a very
tough answer.
Balancing a budget takes herculean discipline, objective rationale and
a keen sense of where the dollars spent will be best applied. This is
true for individuals, families, major corporations, states and nations.
All of these entities can have way more expense line items on their
budget than money coming in so planning and discipline are critical.
Also it help to have an account (or pool of money that is principal) and
can be used in an emergency. The best way to set this up is to match
the interest payments and other revenue sources in the aggregate
against the budget expenses and preserve the prinicipal. In today's
interest rate environment, this is very difficult to do. This introduces
more stress on the budget and can erode (or withdraw) the principal
that you are trying to preserve (or save.)
