Personal Finance – Dealing With Recession to Keep Your Wealth Stable
A call for persons to spend more might seem like very strange advice for a financial coach to give in these challenging economic times. The typical recommendation for weathering this tough economy is to cut back on consumption by buying only the basic necessities and channeling as much money as possible into savings.
First, let me qualify my comments by indicating that my discussion on the merit of spending is not intended for persons who are in unmanageable debt or unable to make ends meet. If you are in that position (as too many of us are) then you need to focus your attention on aggressively reducing your liabilities and earning more money to cover your budgetary needs.
Eliminate the "ynots". What is a "ynot" you ask. Let me explain. Before I decided to get serious with my finances, this is how a typical trip to the gas station would go. I use the example of the gas station, well, because, we all put gas in our cars, and probably quite often. For me, it was usually about once a week. So anyways, I go to the gas station to put gas in my car. I go inside to pay, and of course, I always had to go get a Coke. Or something to drink. And then, usually depending on the time of day and so forth, I'd usually get a little snack for myself, and if it was Sunday, I usually grabbed a Sunday paper.
The reality is that our financial system will depend on robust consumer spending to overcome the negative effects of the current economic crisis. We have already seen the results of the reduction in consumption – businesses experiencing decreased sales and profit, workers losing their jobs as their employers are forced to cut back on expenses, and persons without a steady income depleting their savings.
This vicious cycle of events has wider implications for the economy; financial institutions will see a decline in savings and borrowing, and government revenue will fall off due to the reduction of persons on the tax roll. Therefore, when consumers succumb to a fear of the 'recession', it can actually be a self-fulfilling prophecy resulting in the destructive situation that we would like to avoid.
The last and perhaps most important thing, it is what to think and do to take action. It is common knowledge that nothing will change if you do not do something to change. You can think about different result in different decisions, and therefore to different results.
Now, you have to honestly and seriously ask yourself the question too. Because of course we can justify things to ourselves in our own minds quite easily. Actually, I kind of changed it into a series of questions for myself, at least in the beginning. My questions went something like this:
"Do I really need it, or do I just want it?"
"Can I get by without it?"
"If I really do need it, have I looked around enough to know that I am getting it at its cheapest?"
Do you want to know what happened to me 99% of the time? Most of the time, I didn't get past the first question, and most of the time after that I didn't get past the second question. And almost 100% of the time, I didn't get past the third question. Meaning if I past the first two, I knew I still had some looking around to do. And even then, I usually never got around to doing that part so I ended up not buying whatever the particular item was.
So you see, here are a few easy ways to save money that I put into place in life that were more adjustments to the mental outlook and attitude that I had towards money rather than something like keeping lights off in the house
Resource Author Francisco Rodriguez H.
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Tags: personal finance