NEW YORK (MainStreet) — Greece has the highest debt-to-GDP ratio in Europe, owes the European Central Bank €3.5 billion ($3.85 billion) and has until Thursday to secure a deal with creditors. You can blame the eurozone, as some have—one single currency for 19 countries may not have been the best idea. Many European countries have serious public debt compared to their respective GDPs—Belgium, Italy, and Spain are at top of mind, but others are in relatively serious trouble, too. You can blame Greek politics, as many observers have, or you can blame what some claim to be a misguided austerity budget gambit.

It’s probably a combination of the three. But, if you pick apart all of those potential reasons, you can find some basic lessons about budgeting that can help you manage your own finances.

The eurozone complaint? Doubts about the euro’s positive impact on individual countries within the European Union have persisted since 1999. Depending on how you look at it, Greece is one big, finger-wagging “I told you so,” or it’s a necessary test for the eurozone if it is to survive another 16 years. Either way, the principle of balancing personal interests and the good-of-the-order comes into play here when thinking about a personal budget.

There are expenses that you need to keep your life afloat—house payments, rent, utilities and food. They constitute the good-of-the-order and, if one or another is compromised, then the cascading consequences can be dire. There are also expenses that you value on a personal level—the “good” soap, Netflix or organic, brown and cage-free eggs. They constitute the variable and voluntary decisions that go into personal budgeting.

The point here is not that Greece is on par with Mrs. Meyer’s lavender dish cleaner. The point is if you’re going to stay solvent and satisfied, it’s about finding a balance. Part of that balance is looking at today’s budget, but also tomorrow’s emergencies, the hope for retirement, or the probability that you will want to take a vacation.

“Fund an emergency fund first," says Anne Kates Smith, senior editor at Kiplinger's. "Only then then should you go ahead and save for splurges while you continue to fund necessities.” She also notes that your work isn’t done, even when the emergency fund is healthy. Your retirement plan, too, should reflect an evolving strategy.

“If you can’t fully fund your 401(k), then fund it as much as you can—at least enough to capture any matching funds—and then funnel some of your savings to a vacation fund,” she says, “and aim for more than 10% of income in retirement savings, and increase it as you get raises.”

Is debt a problem for Greece? It’s the chief problem. Greece owes money to Germany, France, Italy, and Spain (among other countries), as well as the IMF, the ECB, other banks and a slew of investors. And, it’s not unlike the kind of trouble people get into with consumer debt, averaging more than $15,000 per U.S. household in credit card debt, on top of mortgage debt, averaging more than $156,000 per household. Then, of course, there's student debt, averaging almost $33,000 per household. Sure, school and real estate represent investments, but credit cards are another animal entirely. Some people have half a dozen plastic rectangles kicking around, moldering in a drawer because they’re maxed out, or faded and cracked from so much daily use.

For Aaron Crowe, a personal finance expert who has contributed to U.S. News and World Report and AARP, it’s about discipline. “The universal strategy, no matter your personal circumstances, is: stop using your credit card, which allows you to live beyond your means," he said. "Don’t get rid of them—maybe have one—but get control of them so you can wipe out your debt to those cards.”

The principle of organizing debt comes into play here. Most people have it in some form, but it doesn’t have to be an immovable object. Don’t rob Peter to pay Paul, but do look into reorganizing your debt, consolidating it or refinancing it. However you tackle it, you have to have a realistic plan to deal with it, regularly and reliably, over a period of time.

“Discipline is one of the hardest things,” says Crowe, who advocates spending less than you earn, even if you have to restrict yourself to cash only for a period of time. If that seems unrealistic and using your card is more reasonable, then use technology to your advantage instead of your downfall. “We all have smart phones, and you can buy anything at any time,” he says, “but, you can also use those phones to set alerts so you can monitor your habits.”

Spending less than you earn is related to the debt question, and it’s at the core of the austerity budget that both the ECB and Germany have been pushing. Greece rejected it because, frankly, austerity is a scale problem. It’s a noble but tough policy on an everyday level for the whole of 11 million people. At the level of the individual household or person, however, austerity works if you’ve managed to balance your needs and wants, and if you’ve managed to get on a debt-relief track that plays out over six months or even six years.


Austerity is about belt-tightening—and seeing every decision with financial implications, no matter how small, as an opportunity to keep the belt cinched. A frozen pizza is often one-third the cost of calling out for one. Stop checking your phone like a fiend, and you can probably dial back your data plan. There are plenty of places you can find those sorts of tips, but austerity is an attitude as much as a playbook.

“You have to accept some austerity,” says Smith, who points to Greece as a cautionary tale. “You can’t operate for a budget deficit for long.”