Tough Times are an Opportunity to Get Better at Managing Money
Managing money is a big challenge for most Americans. Part of the American way is to spend all the money that we make, and a little bit more. Compared to other countries, we have higher spending rates and lower savings rates. Whether it’s a new iPod, a new computer, a new piece of clothing or a new car, we are always looking for ways to spend money.
All that changes when we suddenly lose our job. When the economy is going down, as it is now, people have uncertainty that they’ll have enough money to buy even the necessities of life. For many people who have lost their job, and those who are worried that they might be next, this financial crisis is a wake-up call. Maybe it’s time to take a look at how we manage money so that the next time that there is financial chaos, we will be in better position to handle it.
The old, tired system of managing money was budgeting. Passed down for generations, most people assume that using a budget is the only way to properly manage money. Unfortunately, budgets don’t work. I think most people have had first-hand experience of this fact. One reason that budgets fail is that we cannot accurately predict the costs for things that we don’t plan on. This includes sickness, car repairs, and random events that we had no idea would ever happen to us.
So what’s the solution? The solution is to pay ourselves first. That means taking money out of every dollar that comes into our hands or checking account. We put aside a certain amount to save and invest. That could be 10%, 20% or more. It could be 1%. The amount does not matter. It’s the habit that’s important.
Another thing that we can do to improve our finances for the future is to use new technology to make managing money easier and more effective. Mint.com is a perfect tool for helping us manage money. Not only is the site incredibly smart and easy to use, but it has received positive reviews all over the Internet. I highly suggest setting up an account and trying it out.
These tough economic times are a real challenge for everyone. But they don’t have to be a time to panic or to suffer. We can use these times of financial challenge to develop skills so that we can improve our future. Managing money is one of the best skills we can work on so that our financial future is bright.
This is the third of a series about how the down economy is good for your finances. The previous post is Can Getting Laid Off Actually be a Good Experience? The next post in the series is Falling Prices are the Bright Side of a Bad Economy.
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Related posts:
- Apple’s Success in Tough Economic Times
- Top Investing Mistake #13: Not Managing your Time
- A Wake-Up Call for Personal Finances
- Top Investing Mistake #14: Not Managing your Effort
- Shorting The Apocalypse: Why The Bad Times Can’t Last
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is one of my favorite financial books of all time. It's an allegory about a guy who has a terrible job, and how he overcomes challenges to achieve his dreams.
Although I am not currently suffering in these difficult times, it has given me an impetus to better understand where my money is going and to decrease spending on things that are not really adding any value to my life. That way I will be in a better situation if I do end up loosing my job.
Hi Garry,
That’s a good point. Even if we are not in financial crisis, we can still take time and look at the value we are getting from the stuff we buy. Thanks for your post!
George