Terrible spending habits: college student vs. US government

The United States government and I have very similar spending habits. As a point of clarification, I turned 22 last month. The United States of America turned 238 in July. Allow me to elaborate.

As a person in my early twenties, I delegate my brainpower to the short-term investments of my future. Sure, I know I have a quiz coming up in Econ, and yes I know I need to find a job. But retirement? Forget about it. My finance professors consistently stress the importance of long-term investments, yet I remain unconvinced to act upon my distant future. I worked at a job in New York City this summer that paid handsomely. If you would like, I will shamefully show you my current bank statement. Long story short, I’m not fairing too well.

And neither is the United States government. Much like myself, it has an awful habit of spending far more than it saves. For simplicity’s sake, we will define consumption (government spending) and savings in rudimentary terms as they apply to the federal budget. Consumption consists of outlays for items such as Medicare, income security, and in general, entitlement programs.

Savings, on the other hand, is an investment in the future. For myself, savings equates to an investment in my retirement. For the American government, savings is an investment in future generations. This includes spending on education, utilities and infrastructure. Spending on these goods and services provides a benefit to future members of American society.

If I continue my terribly immature spending habits out of college, I will be destined to a retirement in a cardboard box. Spending more money than one saves is unsustainable. Eventually the debt collector comes knocking, and unless you’re a Lannister, you’re probably screwed.

Government spending on general consumption (Income Security, Social Security and Health Care Programs as found in the CBO’s Budget and Economic Projections), currently accounts for 58 percent of government spending. And that figure is only expected to climb. By 2024, estimates indicate that it will be over 62 percent. Simply put, we are spending more than we are saving.

I am not suggesting that the government needs to stop all “consumption” and stop paying for Medicaid, Medicare and Social Security. Expenditures on health and entitlement programs certainly provide a public good. I too need to spend money to eat and maintain my health. There are certain expenses that need to occur for both the American government and me. However, justifying my summer expenditures with “living in the big city,” didn’t fly with my father. Some spending habits are simply unsustainable.

Sometimes you have to learn from mistakes. For me, that will probably manifest itself in the form of an unforeseen car maintenance expense that I had not saved for in advance. The federal budget, however, is not one of those examples. The government should start caring for the future of its citizens by investing in its crumbling infrastructure and rapidly deteriorating education.

My terrible spending habits can be described as fiscally irresponsible. The government’s terrible spending habits can be more accurately defined as fiscally reckless. Although my immature expenditures will negatively impact only my own future, carelessness with the federal budget will have destructive consequences for generations of unborn Americans. Hopefully we establish a more sustainable budget. In the mean time, I’ll start saving for my 401k.

Contact staff writer Charlie Durkin at charles.durkin@richmond.edu