Following the state of the economy for more than a year has been a painful experience for consumers. Few need to be reminded of the hardships people have faced. The news doesn’t appear to be as bleak in recent weeks, however the economy is still troubling and will likely remain that way for some time.
Most people are familiar with the saying, “desperate times call for desperate measures”. The question is: have consumers adapted to tough times by changing their lifestyle or have they proceeded as normal hoping things will improve?
The basic principles and practices of good personal finance haven’t changed over the years, however as a society we have altered what is normal or acceptable behavior. For the first time since the Great Depression the savings rate of Americans dipped into the negative numbers four years ago. Perhaps that information could have served as a warning of what was to come-the recession which we are living with today. Here are a few lessons consumers have hopefully learned over the past few months.
- Credit Should Be Used As A Financial Tool – Credit card debt has risen to epic proportions for a large portion of the population. This occurs when people use credit as if it were income. When credit cards get maxed out and consumers continue to rely on credit to pay for day-to-day expenses or worse- other bills – there is definitely something wrong with your money management. As the credit industry tightens the reins on lending, consumers who haven’t already adjusted their spending habits will quickly learn that credit should be used as a tool, not as money already earned.
- Saving Money Is Not An Option- Far too many people have learned the hard way the importance of having a savings account to see you through tough economic times. In some cases consumers have been hit with a double whammy, living off of credit AND not saving any money. For those individuals loss of employment or some other financial emergency can be devastating. In order to have financial security in your life you must allocate a portion of your income to savings. If you are just starting out or experiencing a financial hardship the amount of money doesn’t matter, as long as you commit to an amount and get started today. When you get your finances in order you can then increase the amount and build your savings more quickly.
- Simplify Your Life- There are literally dozens of lessons we can take from the current state of the economy. Sadly the road to recovery will likely be a long one for the economy and many families who have experienced job loss, home foreclosure, bankruptcy or decimated retirement accounts. Consumers would be wise to simplify there life, learn how to manage their finances, and rediscover what is really important in their lives. If you can eliminate the stress in your life you will be in a better position to work through the challenges ahead.
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