Balancing Your Budget and Developing Long-Term Savings

There are many things to buy and in today’s consumer culture it is more difficult than ever to say “NO”. Learning to live within your means and save for the future is a discipline you can learn over time to create financial security. Putting effort into changing habits makes a big difference in how successful you will be in creating a savings plan.

Balancing your budget is as much about habit as it is about planning. Learning where to find deals on products, understanding value, and making better choices takes time to ingrain as a way of thinking. Start small and slowly move toward higher levels of spending discipline.  You can still get what you want but should learn the best use of your money.

You will have to give up the idea of spending as a type of wealth. If you are truly wealthy you can spend on lots of things you enjoy; but they do it with cash. Wealthy people don’t normally just waste money and have a keen sense of value. Spending all your disposable income and maxing out your credit cards has nothing to do with wealth.

Make a differentiation between what you need and what you want. There are differences as paying for your needs food, shelter, clothing, car, etc. are your baseline. This is where you can live a reasonable life without extras. What you want is everything else you spend on top of your baseline.

Spending choices are an extension of how you see yourself. If your self-perception is trendy you will buy the latest and greatest products that are popular on t.v. or you may gravitate toward sports and sport products. Getting your ego under control can go a long way in helping you save money. Ask yourself if this is really something you need?

There are two hurdles to saving money that include your habits and your self-perception. Changing both can lead to better fiscal choices and higher levels of financial security. Start small and make little changes until you start creating a cushion in monthly income.  Make a habit of putting that money away for long-term savings so that market rates can help you to your goals. Over time these choices will add up to serious cash in your bank account.

The Benefits of San Diego County and City Partnering on Charger Stadium Project

San Diego County and San Diego are partnering through putting in $250,000 a piece to hire attorneys, consultants and industry experts to determine the best way to approach keeping the Chargers in San Diego. The plan to collaborate between the two governmental entities is a good one that tells the NFL and the Chargers that they are serious about keeping them here but also about protecting taxpayer interest.

San Diego County and the City of San Diego are stakeholders in the same project and would both benefit from keeping the Chargers in the area. Stadiums are expensive beasts that can easily cost over a billion dollars to develop. Most of the expense related to developing and building will be footed by taxpayers to it is important that the full scope of the project is understood.

There are times when cities get into projects and quickly find themselves overwhelmed with the project, cost, data, and legal ramifications. Effective legal challenges are mounted and soon what appeared to be a good idea is swamped in layers of red tape. Under those circumstances it won't take long for the NFL to figure out their needs aren't going to get fulfilled with this project.

All projects contain an element of risk that can be controlled. By evaluating projects in advance, alternatives, and methods of completion a more comprehensive solution can be formalized. Risk are reduced through the use of an effective plan that takes into consideration the challenges and difficulties that are often a result of expensive and high profile projects.

Successful stadium projects require the ability to plan and understand the scope of the project and then enactment of a strategy for completion (Sampson, 2006). Without defined objectives and knowing what the project is to accomplish there is a high probability that it will move outside of its objectives and include costs and add ons that have little to do with the project itself.

When spending taxpayer money that can have large implications for the area it is important to aim well and shoot once. Protecting taxpayer money and expanding the benefits from keeping the Chargers in town is important business that shouldn't be left up the whim of a few people. Having a team of experts might cost the city and county a little money up front but will save them millions in the long run.

Sampson, B. (2006). Build it and the fans will follow. Professional Engineering, 19 (10).

The Benefits of Staying Home and Living Mooch Economics

Young people are staying home longer and delaying their inevitable jump out of the nest egg into real life. Some may wonder why this is happening when their Baby Boomers left home while still in their late late teens (18). If you think about why they are doing this and the benefits it brings them you can't blame them for smart  mooching economics.

In the past young people couldn't wait to get out of the house in hopes of striking out on their own. Working for minimum wage they took their sleeping bags and roomed with their friends. Over time they got a better job, earned more money, and eventually found someone they wanted to marry. Not long after that they were buying their very first starter home.

Those days are gone and they are not likely to become popular again soon. Over the Great Recession young people couldn't find employment, needed a degree, had material wants, and became influenced by other cultures. No longer was a healty person who was willing to work ensured that they would have a job that would support them.

When jobs aren't plentiful and it is nearly impossible to pay for much beyond car insurance, cell phone and movies it can be difficult for people to move out. A couple hundred dollars a week just isn't going to cut it with the cost of living and other expenditures are twice their income.

Of course young people also grew up during a time when they were provided with lots of electronics, toys, and cosmetics that were associated with a heightened consumer culture. Asking them to throw away the toys and surface stuff they are being judged by their peers on doesn't make a whole lot of sense at an age where image is everything.

Europeans and Middle Easterners are accustomed to staying longer in their parents house. Culture has changed and young people are looking more for security. Staying at home is fine with today's open parenting styles.  If parents aren't pushing them out they shouldn't worry about it, grab a bag of Cheetos and play a video game.

Likewise, if they are attending college and going to be saddled with debt they might as well minimize their expenses as much as possible and stay with their parents. With a little luck their parents won't kick them out until a few years after full time employment.

We may say we want our children to move out as soon as possible but that doesn't make a practical sense for those who are going to struggle to make ends meet. It is much better for them to stay home, finish college, and pay off their student loans before getting married and starting their own nest. If you want one way to lower your debt...stay home and mooch off your parents as long as possible!

Is GDP the Best Measurement of Economic Growth?

Numbers are only representations of ideal states and are in and of themselves subjective to what they measure. A paper by Stow & Stow (2013) discusses some of the fallacies of relying too heavily on Gross Domestic Product (GDP) without considering the deeper meaning of the numbers. Fallacies of judgment can occur when governments adjust their economy to improve upon GDP but don’t look at actual economic activity.

GDP is calculated by adding =C+I+G+NX. Any improvement in consumption (C), Investment (I), Government Spending (G) and Net Exports (NX) would result in an improvement in overall GDP. The numbers could be misleading in the long run and lead to poor policies decisions.

When consumers spend more money they are not necessarily improving total wealth of the nation even though GDP rises. They are simply spending their money, dwindling their savings, buying now instead of investing later, and taking on debt. They may be encouraging organizational profits but not exclusively the wealth of the nation as an entire economic system. 

A similar fallacy can be found in government spending where an increase in expenditures can raise GDP numbers that don’t actually reflect national growth. Spending more today has obvious costs in terms of debt, flexibility, and confidence that are not calculated into the factor. Spending should be in areas that improve overall wealth or reduce liabilities. 

The paper is solid in the sense that numbers are only just numbers and relying on them too heavily can lead to policy mistakes that can be costly down the road. Overreliance on a single number encourages greater government spending and interventionism that can be self-perpetuating as politicians seek to justify new and expanded budgets at the detriment longer term sustainability. Using a battery of different numbers can help provide a greater context more data points to understanding true growth and development. 

Strow, B. & Strow, C. (2013). Gross Actual Product: Why GDP Fosters Increased

Government Spending and Should Be Replaced. The Journal of Private Enterprise, 29(1)

Gallop Poll Shows Positive Worker Outlook

A poll by Gallop brings discusses improvement in worker perception of employment. 58% of full and part-time workers say they are completely satisfied with their jobs as compared to 50% in 2009-2013. The growth in the economy, lower unemployment rates, and improving employment opportunities are having an impact on worker perception. 

The numbers also spotlight a few areas of concern. The amount of work, physical conditions, relationship with bosses, job security, recognition and workload are above 50%. Areas below 50% are opportunities for promotion, retirement, health insurance, earning power, and job stress. 

Benefits such as health insurance and retirement have taken a significant hit in the current market. Employers often cut back on these expensive benefits due to the inherent increasing costs with little direct return to the employer. Employees will be asked to pick up a higher percentage of these costs. 

A problem results when earning power is not sufficiently rising, making increased contributions to such programs difficult. As the cost of medical care shifts to employees with lower incomes new ways of doing things become necessary. The health care system itself is expensive beyond the cost of insurance. 

Another important issue to workers is retirement. The traditional pension is nearly gone and the 401K is the standard approach. In today’s transient world the 401K offers more portability but also requires higher employee contributions. This can be difficult for people at lower income brackets. 

As a country we still have some work to do and the positive employment perceptions follow suit with the improving economy. New ideas on how to manage retirement, higher savings rates, a more efficient medical care system, and a focus on improving income opportunities for all Americans is necessary. The numbers can slide as quickly as they rose. 

http://www.gallup.com/poll/175190/americans-satisfaction-job-security-new-high.aspx

Book Review: The New Middle Class by Steve Gunderson

The New Middle Class Creating Wealth, Wages and Opportunity in the 21^st Century by Steve Gunderson delves into the problems faced by middle class Americans. He expresses concern over the mismatch of American values, education, economic policy and American competitiveness. The middle class is slipping away and policy makers should consider new ways of encouraging a 4-5% growth rate and higher levels of educational attainment to maintain prosperity. 

National development should be based on those values that made America great. It is the desire to continue to move up the economic ranks while not ignoring wider responsibilities. Yet without improving upon the education system the grasps of middle class are sifting through the hands of those who desire it the most. The system needs to change and improve if the U.S. will maintain its competitive stance. 

The far majority of jobs today (85%) need some secondary education beyond high school.   The path to maintaining the middle class is through education. It is a process of learning the skills, trades, theories, processes, technology, and values that will help individual families grow so that the nation may continue to lead. The quality of education, way in which government views education and economic policies should be reviewed. 

Students will need to continue to learn throughout their lives and become the life-long learner. As the environment changes they will need to ensure that their skills are updated to match current needs. To graduate and never update one’s understandings doesn’t fulfill either individual or national needs. Those with less than a high school education earned approximately $21K per year while those with a bachelor’s degree earned approximately $58K per year creating a wide disparity. Income and life-long learning go together.

He provides the following strategies:

Strategy 1: Create a system for lifelong learning by engaging public-sector-private-sector partnerships.

Strategy 2: Create a growth economy in the U.S., enabling most Americans to work, succeed, and build a future.

Strategy 3: Create a new era of income security for individuals and families. 

Steven Gunderson was raised in rural Wisconsin and made his way into both Wisconsin and national politics.  He spent eight years in the house and was appointed to the White House Fellows program in 2010. The White House Fellows program was developed by President Johnson in 1964 and outlined its objective as, "to give the Fellows first hand, high-level experience with the workings of the federal government and to increase their sense of participation in national affairs."  He is currently the President of and CEO of the  Association of Private Sector Colleges and Universities.  You may learn more about him at Career.org