What The Recession Taught Me About Balance
In March, consumer spending increased. After months of frugality, consumers seem to be looking for a reason to spend. Even though the U.S. savings rate has increased since the start of the recession in December 2007, is the recent uptick in spending an anomaly or the beginning of sustained increases in spending? Despite the March increases in employment, unemployment is still stubbornly high. And consumers don't spend when they don't have steady, good-paying jobs. I know that from first-hand experience.
I can't speak for all Americans, of course, but I do know that after more than half a year of buying practically nothing except food, I'm suffering from a bit of no-spending fatigue. Recently, I found a great job after several months of searching and freelancing.
After thanking my lucky stars at finding a job in the midst of a great recession, I felt a sudden weight lift of my shoulder. The young professional in me celebrated: I have a good job again! and the responsible personal finance blogger in me rejoiced: I can save again! But lest you think I'm too virtuous, the consumer in me also breathed a huge sigh of relief: I can spend again!
A velvet jacket at J. Crew (still on sale, of course)? Into my checkout basket it goes. So does the hotel room cost for a weekend trip. I will be able to set aggressive goals toward saving for retirement and short-term savings, but part of the joy of having money, no doubt, is the ability to spend.
I'm guessing that's the sentiment that many consumers are feeling right now. On the one hand, America's massive consumption during most of the past several years was unsustainable -- for the economy, sure, and, many would argue, the environment. A correction would have happened sooner or later, although the severity of this crisis has surprised everyone, even the experts. This recession has forced many of us to reexamine our priorities, our long-held beliefs, and make do with less. On the other hand, glimmers of a rebound are wonderful, because living in an economy besieged by high unemployment and low consumer confidence just stinks.
Good money management is an exercise in balance; I've learned that now. By not spending as much as I could have during times when I had money, I could maintain my standard of living and not cut back as much as I could have during times when I had no money. For example, I stayed in my gorgeous studio and paid for a planned vacation in cash. If I had not had my emergency fund, I would have had to move back home and forfeit the chance to go on vacation.
I know I was very fortunate to find a job in this employment market. Now that I have a full-time job again, I know I will keep trying to balance long-term goals against short-term enjoyment, knowing it's better to be overprepared than underprepared for a change in employment. Still, as I rebuild my emergency fund and catch up on retirement contributions, I'll do so with a little fun spending thrown in.
Save for tomorrow or live for today? [Money and Values]
Save for tomorrow but don't forget to live today [My Financial Journey]
Seven years of earning and spending [My Open Wallet]
Image Credit: Wikimedia