Friday, December 11, 2009

Lessons from recession

By Alma Zhumagulova

This recession has taught American people to manage their finances better, to spend less, save more and to be financially responsible for them. However, now that the economy is recovering many people might go back to their old habits of impulsive purchases, not keeping track of spending, not saving etc. This is called the “wealth effect” and is commonly observed after the times financial distress.
However, people should not forget the lessons they learned from this recession. So even though it might seem that you don’t need to worry anymore about your finances, you should still set aside some portion of your income – at least 10%. Restrain yourself from unnecessary purchases; think where else you could have used that money. However, avoid being too frugal; have a small portion of income set aside for impulsive purchases and NEVER go beyond that number.
Another advice is to treat your money well: pay attention to how you treat it, keep them “neatly sorted in your wallet”, and not stuffed in random places, balance your checkbook regularly, and pay your bills on time.
In order to be on the same page with your partner, have the “money talk” and make sure you both have the same financial goals and objectives and follow the “rules and regulations” on how, where and when to spend your money. Your financial future depends on the decisions made by both of you, so ensure that you are both on the right track.

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