Indebtedness on the part of households and companies has been increasing, at historically high levels. State debt follows the same path. It keeps climbing, giving families a clear signal that we can (and should) spend more than we get.
What is the budget balance?
Recently we had a debate in parliament where someone said that the debt had gone down, showing “some” ignorance about the concept of budget balance. If the budget balance is the difference between what the state receives and what the state spends, being in deficit means that we have spent more than we have earned.
Debt = Debt!
If we spend more on the world of the household means that we are in debt or that we reduce the savings. In the world of the state it can only mean that we are indebted, because the savings do not exist (at least in the Portuguese state). So if we have a deficit, debt increases. Score.
I am concerned that we are all pleased that we have “reached the lowest deficit in the history of democracy” (which is still a good thing). I am worried that no one will ask why we can not have balanced finances. May we be content to spend more than we have earned … over the last 40 years. No interruptions. And regardless of the parties that governed us.
Families Should Have More Caution
The example of budgetary rigor has to start from the top. However, this should not be an excuse for us. As parents we have an obligation to manage our family budgets well. To have conservative management, creating savings (when possible) and reducing costs where possible (and in many cases wasteful).
Families Can Cut Their Costs a Lot
One last idea. Families can and should focus on cutting the costs of expenses that are not essential to their lives. We can suggest, for example, start with saving on your credit and homeowner’s credit life insurance. Together, they can represent hundreds of euros every month