There seems to be a great deal of negative connotations around spending money these days. Though the Canadian government has recently declared the worst of the recession over, it seems to be that people are still very cautiously spending their money. Companies are still undergoing layoffs and many unemployeds can still not find work. Kai’s cultural topic of the week is:
CONSUMERISM
I was once at a family reunion where everyone had to give a little speech about who they are, what they do, what they believe, and demonstrate a special skill. My skill turned out to be wearing a Calgary Flames Jersey, putting on a cowboy hat and shot-gunning a beer. Glacier fresh-tasting Kokanee, it’s the beer out here. My uncle, on the other hand, spoke of the downward sloping demand curve – the basis for understanding economics.
Consumerism is not a new concept but the fear of it is. Economic principles and cultural norms suggest that we can stimulate the economy by spending, but what happens when there is no money to spend on an individual level?
The recession took its toll on many countries, companies, families and individuals. Those who made it out unscathed should consider themselves lucky. I have been in my current job now for about 9 months and the company is doing well by most standards but there will obviously be obstacles as no business is truly recession-proof, as I became merely one of the many statistics to be unemployed in the last two years.
I’m beginning to sound very textbook and uninteresting, so let me just simplify it for myself and for everyone reading…
When you have very little money, it’s simple: you should not be spending. Buy what you need at that’s it. In fact (to over-OVER-simplify) this is what caused the entire recession in the first place (along with other complicated refinancing plans and poor decisions by financial institutions and international bodies).
There seems to be this general understanding and acceptance of people who live outside their financial means and it needs to stop.
From time to time I get criticized for driving and older vehicle because it’s not as pretty or as fast as something only a couple years old. Driving newer/financed vehicles often can have as many if not more costs than driving an older vehicle that once all the balance sheet is laid out. Increased insurance payments coupled versus do-it-yourself maintenance projects can often leave you on a similar playing field. Obviously you don’t plan for emergencies and this is why you need to have a safe-hold. It’s not that I can’t afford to drive a nicer vehicle, it’s just that by driving a reasonable older vehicle I allow for other luxuries in my life: photographic equipment, snowboarding, international vacations, motorcycle, eating out, etc…
Financial advisors suggest keeping on hand at all times a minimum of three months salary in liquidable savings in order to safeguard any sort of job loss or accidental costs that may occur. Sounds pretty reasonable to me…
The easiest way? There is no clear cut method but savings have to be in your spending budget. You can easily budget fun, travel, luxury items and other big tickets into your spending but the most important key is to pay yourself first. If you can’t save money, don’t buy anything else. Just slow the spending. Buy essentials. No, a $2500 purse on sale for $1500 is not an essential item…
When it comes down to it, you are going to be the only one affected by your good or poor spending habits, so if you can either live with the consequences of living in debt or stretching yourself so far that you can literally not afford to splurge or you can just think a little.
Spending money is not rocket science, it is simple economics.
