Sometimes bad news ends with good results. Take the current dispatches from the economic front – every day there seems to be more disheartening news, from Wall Street, Detroit, Washington, Tokyo and the other big commercial hubs around the world. As grim as it all sounds, however, the silver lining here is that smart people will reevaluate their spending and living habits, and make changes that strengthen them in the long run.
The most recent statistics on American consumer spending are sobering. October saw a 2.8% drop in consumer activity, signaling that people are more interested in belt-tightening than belt-purchasing. Who isn’t, given the times? Reigning in your spending in order to live within your means is a no-brainer in any economy, whether it’s boom or bust. We just tend to forget that when things are going well, and so indulging whims here and there gradually becomes the norm. It’s like going on a diet – it’s tough, but in the end you’ve lost weight, look and feel better about yourself, and saved money on your pizza and ice cream habit. Hard to argue with those results, right?
Prioritizing your needs vs. wants is a good place to start. Can’t tell which is which? Mortgage payments, tuition, proper winter clothing and food for your kids are all needs. Spontaneous trips to Mexico and a new Audi when your old Toyota is still running strong are wants. Put a stop to indulging the wants and you’re halfway to a rational spending policy and a stronger financial picture. It’s not fun, but which is worse – going without unnecessary frills or getting slammed by debt when you’re anxious about keeping your job? When you get down to it, a leaner and meaner you is win-win, regardless of the economy.
