Blog

Living like a King, Working like a Slave

Posted by Myles B. Brandt on 21 September 2009 | 0 Comments

Tags:

It should be no surprise that the most common advice given by financial planners is "spend less, save more." (Hint: You don't need to pay someone to tell you that; but if you want to anyway, I'll be happy to assist you.)  Many Americans work all day, 5 days a week, for years.  When it's finally time to stop, they have nothing to show for it. What did they work for?

For the past ten years the Personal Savings Rate in the US has been hovering around 2% until recently hitting 5%*. Consumer Spending as a percentage of GDP has been rising steadily for the past 30 years.

For many the financial crisis has made it apparent that changes need to be made. Consumers have started to make those changes. Consumer Net Increase in Liabilities is actually negative for the first time in 50 years and the personal savings rate has increased. (Consumers are actually paying off their debt!)

Most people, including myself, have problems curbing their spending because it is completely habitual. However, if you change the way you think about money, you can change hard to break habits. A few suggestions:

  1. Time is your most precious resource. When you think about how much something costs, think about how much time it takes you to make that much money. Is that martini really worth an extra 30 minutes at work when compared to a beer?
  2. Make yourself write down what you spend. Merely writing it down proves to be a deterrent to spending. Tracking expenses keeps the numbers in front of you and reminds you that the money is real. Money is normally viewed on a computer screen or a credit card statement and can often seem invisible.
  3. Write down your needs, wants and goals. Keeping track of these will motivate you to spend money deliberately. 
  4. Ask yourself what you are doing to make your life better.

*Source: U.S. Bureau of Economic Analysis, National Economic Accounts

 


Share |


Post your comment

Comments

No one has commented on this page yet.

RSS feed for comments on this page | RSS feed for all comments