James d. Gwartney

Video:
Giving While Living

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221
Video:
Lending to the Poor

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222
Budget Your Spending and Saving
Money is only a tool. It will take you wherever you wish, but it will not replace
you as the driver.
— Ayn Rand, Atlas Shrugged (New York: Random House, 1957): 411.
Most financial insecurity today is the product of unsound choices. Spending more than you
earn, building up debt without concern for how to repay it, lack of budgeting, and other unwise
financial habits create havoc and cause stress. A commitment to budgeting is key to obtaining a
healthy financial life, building wealth, and achieving your personal goals. People, like nations,
build wealth through saving and investment. But successful building of wealth also takes
strategic planning. There must be a plan in place to guide how the spending, saving, and
investment are directed toward wealth creation. For the individual or household, that plan is a
budget
(?)
. A budget helps you channel your funds toward sound spending, regular saving, and
diversified investments in a manner that will provide you with the most value from your
income.
Effective budgeting is an ongoing process, not a one-time event. It is comprised of two
specific actions. First, you must create the initial budget that identifies all of your planned or
expected income and spending for a period of time. Most people create a monthly budget, but a
yearly budget is also common. It is important to carefully consider all of your spending, not
just the highly visible spending like groceries, car payments, and rent or mortgage. Don’t
forget about birthday gifts, annual pet license fees (€112.80 a year in the Hague, another good
reason to avoid becoming a war criminal), magazine subscriptions, and oil changes for your
car. Estimate your monthly or annual income; then identify where you are going to spend every