Friday, February 18, 2011

Memories Are Short

After two and a half years of reduced spending and increase savings consumers in 2011 have turned a corner and spending is up and savings rate is down.

In fact, 52% of consumers say the recession has "forever changed" the way they spend and save, according to a recent survey by Citigroup. But that's down from 63% when the same survey was conducted a year ago.

But that means at least 11% are back to their old ways, as the economy improves will you stick to savings or will you return to your spending ways?

For us, I think we are generally entrenched in our personal finance habits. We are in year 5 of working off a spending plan and allowance system and year 5 of not using credit cards and year 4 of a committed yearly savings plan. But, I recognize that the forces of evil, the free spending friends, consumer trends and advertising, are hard to avoid and hard to resist. As those forces go stronger we will have to recommit to focusing on our way of living.


Sofia Britts said...

I would rather stick to saving than spending. I don't want to experience the rough times during the recession again. That's why I am managing my money well to pay my loans and attain financial stability. I learned a lot during the crisis, and now, instead of the usual hanging out every payday, my friends and I just rent DVD's to watch together at home or have barbeque on weekends (we share the expenses) in Beth's house in Wisconsin.

Jason said...

I read that story last week and thought the same exact thing. Didn't take long for a large percentage to return to spending more and saving less. Another up year or two and it will return to normal.

We started our journey to pay off our debt/save starting in 2007 but it wasn't influenced by the crisis as it was pretty early on in that whole thing. But more by catching a podcast of the Dave Ramsey Show, we realized how fast we would build wealth without debt.

I get way more happiness these days from moving our paychecks into targeted savings accounts, retirement accounts and not having to worry what day of the month a bill comes due than I ever did from buy now pay later.

Maybe it's different if you never paid down/off debt but just started saving some money. But being out of debt (except our mortgage) is the greatest feeling.

Sam said...

Jason, We did the same, we paid off our unsecured debt in 2007 and Dave Ramsey was our guide. We were motivated both by our marriage in 2006, since we were merging our finances (including our debts) and by my desire to get a new (or nused) car. I came across Dave Ramsey while trying to figure out how to buy a new car without a car payment (read his drive free for life and then picked up his Total Money Makeover).