Page 85 - Rich Dad's Increase Your Financial IQ: Get Smarter with Your Money

The definition of a budget deficit in Barron’s Finance and Investment
Handbook is: “Excess of spending over income, for a government,

corporation, or individual.” Notice the words “excess of spending over
income.” Spending more than you make is the cause of a budget deficit.
The reason so many people operate on a budget deficit is because it’s so
much easier to spend money than to make money. When faced with a

crippling budget deficit, most people choose to cut back on their spending.
Instead of cutting back on spending, rich dad recommended increasing
income. He thought it smarter to expand your means by increasing income.

BUDGET DEFICIT OF A GOVERNMENT

When talking about the budget deficit of a government, Barron’s states, “A
budget deficit accumulated by the federal government of the United States
must be financed by the issuance of Treasury bonds.” In the previous

chapters of this book, I wrote about how the U.S. government was financing
its problems by selling debt (i.e., treasury bonds) that future taxpayers must
pay for. The Social Security trust fund, which does not really exist, is filled
with treasury bonds. In other words, because the U.S. government operates

a budget deficit, the money that workers and businesses have been paying
into the Social Security fund has been used to pay other bills, not to
increase the Social Security trust fund. See the diagram below.