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We all look forward to paying our taxes, right? It’s always nice to know that our hard-earned dollars are going to be used responsibly. Or are they?
A search for ‘government waste’ on Google returns more examples than you may want to know of how American tax dollars are spent. In fact, an Oklahoma Congressmen, Steve Russell, publishes a quarterly Waste Watch report in an effort to expose waste and identify ways to reduce unnecessary spending.
Total disregard for our money aside, the reasoning behind such behavior can be attributed to the fear that if the budgets aren’t spent before year’s end, then next year’s budgets may be cut. That’s probably not very likely for government, but does this scenario sound familiar for private enterprise?
In private businesses around America, department managers that have been frugal all year suddenly start spending at year’s end because money left in the coffers is money that likely won’t be allocated to that department next year. The reasoning is not to reward the fact that the department saved money but to punish them (even if inadvertently) for not spending all they asked for. Hence, we have managers looking for ways to dispense of the evidence that they were spendthrifts for the better part of the fiscal year or didn’t project expenditures correctly.
In my podcast O0ps! #10: The Budget Process I explain that often enough the wrong people get rewarded and those who have earned the reward, get punished. However, if you want to make year-end budgeting truly effective, rather than reinforce a spend-the-money, hide-the-money shell game, you can take a few steps that provide more fiscal sense:
These actions will make budgeting in general, a more fruitful, honest endeavor. Including employees in the budgeting process will inspire many valuable savings suggestions, especially when they learn that they profit from the results.
© Aubrey Daniels International, Inc. All rights reserved. 2020