Rethinking Your Spending Habits During Recession

Here’s an article I wrote on how you can cope with the current economic crisis.

You’ve probably been spending freely like me before the global economic crisis hit us. Compulsively shopping, frequently going out for dinner, regularly watching movies, getting hour-long massages at spas, drinking designer coffee…

I used to do these things a lot before the recession happened, and I bet I’m not the only one.

Since then, I have managed to tighten my belt just enough so that I could still indulge once in a while but not as much as I used to. There was a big change with my spending habits. Instead of going to the movie theater once a week, I would just wait for the film in DVD. Instead of eating at a fancy restaurant, I would just settle for some fast food. And instead of shopping every weekend, I would just wait for the occasional sale. Even if the recession brought a drastic change to my lifestyle, I believe it has taught me to become more practical and more prudent with my finances.

Here are some tips on how to rethink your spending habits during the recession:

Cut Back on Luxuries

First, list down all your daily expenses so you can figure out what to cut back on. Of course you have to spend for your basic needs like food, clothing and your living expenses. But do you really have to buy designer duds? Or do you really, really need to go to Starbucks everyday? You could live without these luxuries, you just need to do some adjusting.

Buy Used or Refurbished Items

You don’t always have to buy brand new. It’s perfectly fine to get a second hand items as long as you check that they’re it’s in good condition. For instance, if you’re in the market for a car, instead of getting brand new wheels, you could get a used sedan for a fraction of the price. Aside from spending less, you’d also contribute less carbon footprint (Mother Earth would thank you for it.) The same goes for refurbished gadgets like computers and mp3 players.

Ask for Promos or Discounts

Internet, cell phone and cable providers usually offer promotions from time to time. All you have to do is ask about it. Even restaurants and stores sometimes have ongoing promos or discounts. Again, just ask – you’ll have nothing to lose if you do. I actually tried asking for a discount at a sports store once and they gave me an additional 10% off at the counter. I was pleasantly surprised when they granted my request. It could happen to you too.

Pay in Cash

When you’re buying something, I suggest that you pay in cash rather than charge it to your credit card so that it would be easier to keep track of your finances. You’ll know exactly how much money you have left and not be in any risk of credit card debt. Even if these cards are convenient to have around, it’s also risky to have one especially if you have a tendency to go wild with your spending. At least when you’re using cash, you’ll know when to stop – when there’s nothing left in your wallet anymore.

Since the world is still experiencing financial crisis, you can’t do away with spending freely anymore. You can’t just sit back and relax. You need to adjust to the circumstances and welcome change in your life. You need to re-think your spending habits so you can stay afloat of the situation. After all, you don’t know when the recession would end. That’s why you should physically and mentally prepare yourself for whatever may happen. In the meantime, why don’t you try out my suggestions above so you’ll be equipped to face the financial challenges ahead?

(Published in, October 19, 2009)