5 Positive Lessons to be Learned from This Economic Downturn

While the current recession has been devastating on many fronts, you have the opportunity to learn and be more purposeful with your money.  Here are 5 things to consider:

ATTITUDE – It is easy to feel like a victim of circumstances when your income decreases or your investments shrink through no fault of your own.  So to deal with new realities, a take charge attitude is important.  What’s changed and what do I need to do? is a good question to answer for yourself.  A gentleman, who was a victim of the Bernie Madoff scandal, was being interviewed on Public Radio.  When asked “Aren’t you just furious at Mr. Madoff?” he answered “I don’t care if Mr. Madoff is in jail or in his penthouse apartment.  I am getting on with my life to fix it as best as I can.”  This is a perfect example of an attitude of take charge instead of becoming a victim.  It allows one to move forward instead of  being stuck.

CLARITY – In a good economy when money is plentiful, you may feel you can spend on anything you want and get by just fine.   But when money is tight, if you continue the same patterns, it may get you into a financial bind.  So it’s important to take the time to think through what is most important to you. 

The clarity on these questions will help you use your money and financial resources to the greatest advantage for your satisfaction and happiness.

FIXED  EXPENSES – When you look at your expenses and say “that’s fixed and can’t be changed,” you may be passing up an opportunity to decrease an expense and, in essence,  increase your income.  Here’s some examples: a cable bill each month that includes extra channels you never watch, the health club membership you don’t use, a book club membership you forgot you even had or the monthly wine club you signed up for in a moment of weakness.  Things like these can add up to dollars you might want to spend on something you have been foregoing because of the bad economy, like a mini-vacation to the coast.

SPENDING HABITS – Habits are just that – automatic behavior patterns.  This recession is a good time to watch our daily habits to see if we are getting a bang for our buck with what we do spend.  The Debtors Anonymous technique of recording everything you spend for a month helps people who use it cut spending by 10% without even trying.  This exercise can also make you more aware of where your money is spent and cause you to assess the value received.

FINANCIAL INDEPENDENCE STATUS – With the drop in investment values, many people worry they will never be able to retire.  We found that running retirement projections with the new lower investment numbers helps people face reality and not live in their worst fears.  2 scenarios emerge: 1) they are still financially OK or 2) they aren’t and begin taking specific steps to have long term financial security.  This process helps to banish the worry and not let negative news about the economy overwhelm them.

Learning lessons from this economic downturn can turn this difficult time into a more satisfying future.