I have a feeling I'm missing something about the Current Consumption figure. If the current amount is total spending minus ongoing expenses like housing, taxes, etc. why do I come up with different figures for current consumption when I run the program with a slight change in the inputs? I would think that the amount the program says I am spending this year would be the same, regardless of future years.
Thanks,
JDW
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RSS
No, not really . . . for if the program sees that you need money in the future, it may ask you to save some now in order to smooth consumption. The consumption is what you have available for discretionary spending after housing, taxes, etc. (see total spending report).
But the amount you see in the saving column in regular assets report is not coming out of consumption.
Future spending or income does impact present consumption. That's what is unique about the program--it understands the relationship of everything in your economy.
Dan
Thanks for the help on this. I've been out of the country or I would have responded sooner.
BTW, if suggested savings do not come out of consumption, where do they come from?
Well, it all begins with income. So it does all come from income (see Total Income). But if you look at Total Spending, you'll see that your Consumption is what is left over *after* your saving is accounted for.
If the program is telling you to save, that save is not money you have to pull out of consumption and set aside; it is money that is set aside to save before your consumption number is calculated.
Does that make sense?
Yes, it does. Thanks much.
JDW