What a stupid way to run an organization.
You get a budget and have 12 months to use it. If you don't use all of the money during those 12 months, you risk getting less money the following year.
Hmmm. This is a no-brainer.
Use all of the money so you aren't penalized next time. Even if you don't need it, buy a bunch of crap to show that the money is necessary for your organization to survive.
Thankfully, no one would ever take advantage of such a system.
That's why it works.
NOT!!!! (Wayne's World)
The Problem With Use-It-or-Lose-It Budgets
In the military units I experienced, if we didn't use all of our unit budget before October 1, we risked receiving less money the following year.
The solution?
Burn through any "extra" money before the end of September.
Would you consider this wasteful?
Obviously, government budget rules aren't identical across every organization or type of funding. But when managers believe unspent money will hurt next year's allocation, the incentive to spend everything can become more important than determining whether the purchases are actually necessary.
The military isn't the only government organization where spending incentives deserve serious scrutiny.
A Better Way to Reward Savings
Let's begin to spitball a solution.
You get rewarded for saving money.
Instead of encouraging organizations to spend whatever remains at the end of the fiscal year, give managers a reason to operate efficiently.
Base their budgets on actual operational requirements and previous spending patterns. If they need additional resources, evaluate the request and provide them when justified.
If an organization repeatedly exceeds its budget without a reasonable explanation, investigate the management decisions behind those overruns.
And if an organization accomplishes its mission while spending less than expected, recognize that accomplishment rather than automatically treating it as evidence that the organization never needed the money.
The $1,000 Budget Example
Here's a simple scenario.
You get $1,000 to operate your unit this year. That amount is based on an average of previous years and the work your organization is expected to perform.
If you can operate within that budget, great.
If you need more, the accountants examine why. Legitimate operational requirements can justify additional spending.
But if you're consistently spending excessively without justification, there should be consequences.
Now suppose you accomplish everything you're supposed to do for $900 instead of $1,000.
You've saved $100.
Under my proposal, that $100 becomes a credit or reserve available to your unit during the following fiscal year for an unforeseen need.
If the extra money isn't needed, the manager receives recognition for running an effective operation.
Of course, any reserve or carryover system would have to operate within the applicable funding rules. I'm proposing that those rules be designed to encourage efficient spending.
Rewarding Effective Leadership
REMEMBER: This isn't personal money. It's funding for an operating unit, and you're responsible for how it's used.
Career "atta boys" are important.
A manager who can accomplish the mission, maintain standards, and operate under budget has demonstrated a valuable skill.
That performance should count toward evaluations, promotions, and other professional recognition.
But the system would also need safeguards. We don't want people cutting essential training, maintenance, or equipment just to make themselves look good on paper.
The objective is to reward genuine efficiency, not simply the lowest spending total.
Being able to maintain or improve performance while controlling costs is something any organization should value.
Test the Idea in Military Units
Start by testing the system in small, non-combat military units of 3,000 people or fewer.
Try it at installations and support organizations where results can be measured without immediately disrupting essential combat operations.
Track operational performance, spending, unexpected expenses, and how managers respond to the new incentives.
If the system works, expand the trial to larger organizations.
Eventually, the lessons learned could be applied across the military and potentially to other government agencies.
Of course, the details would have to be worked out. Any meaningful budget reform would require financial oversight, accountability, and changes to existing procedures.
But why shouldn't we reward people for saving taxpayer money while getting the job done?
Stop Rewarding Waste
The point isn't to starve military units of resources or punish people for spending money they genuinely need.
The point is to stop creating incentives that make unnecessary spending seem like the smart career move.
If an organization can accomplish its mission with fewer resources, that should be considered a success.
Give people a reason to save money instead of finding new ways to waste it before the fiscal year ends.
You're Welcome America.
Opinion and commentary. Originally published October 2013. Updated October 2026.