Five Financial Principles
By Alex Saitta
February 10, 2022
Introduction:
In public office you have to have a clear set of morals, values and principles or you will be spun around and swayed off course. You have all these people coming forward providing information, deals being made, friends helping friends, and issues laid out there. Without a clear yardstick to size up the issues, options and facts, it will be confusing to say the least, at worst you’ll be inconsistent.
Some Principles:
Some of my principles include: The government has to be open and transparent. Elected leaders have to proactively communicate with the public throughout their term, not just during the election campaign. The government has oversight responsibility, meaning if it allocates money to be spent on XYZ, it should follow up to make sure that happened, it was done by the rules and efficiently. And I believe in family values and American traditions – they’ve worked.
Financial Principles:
When it comes to finance, there are 5 principles I employ:
1) Live within your means. If your revenue is X, you spent no more than X, maybe a bit less. Do not spend Y way up here.
2) Set spending priorities. In government there are mandates, needs and wants. Know the difference. We do it at home. When I grew up going out to McDonald’s was a treat. Grocery and utility bills came first.
3) In good economic times save money for a rainy day. When the next recession hits, you’ll have some cash to fall back on to balance your budget without having to tighten your belt as much.
4) Keep debt to a minimum. When you pay interest, you get nothing in return – not even one pencil. When the school board or county council borrows, most of that money is lent by and interest is paid to bond holders who live outside Pickens County. For example, Greenville plan’s annual payment is $23 million. Most of those bond holders do not live in Pickens County, so each year that much money is taken out of our pockets and leaves the county. Heck, you could build a new middle school with $23 million.
5) Tax increases are a last resort. Why? The extra money John Q. Public has in his pocket is often spent at the local store or invested. Consumption and investment drive economic growth and income growth that that ultimately raises standard of living.
Our Future:
If you follow those principles beit as a government leader, business owner or individual, you'll do well in the long run. Unfortunately, our leaders, especially in Washington DC, have lost sight of these financial principles. It is the reason why we are $30 trillion in debt – principle 1 and 4. It is the reason despite spending all this money, problems abound – principle 2. Those three principles is where they’ve fallen down the most and for that reason the economic/ financial will get worse and worse over time.
Three Choices:
The three choices the government has to deal with the debt is: a) cut spending, b) raise taxes or c) pay the bills with printed money. One of the reasons I've been wrong in the timing of this all is I never thought in a million years our leaders they’d toss the currency aside and print money wide open like they've had. It will buy them time, but not an eternity.