MSNBC had an interesting article up the other day on the supposed lessons we’ve all learned from the recession.
I really REALLY hope this is indeed the case, but something tells me all will be “back to normal” in no time – if we haven’t gotten to that point already. I remember when all this started people were DEF tightening up and paying more attention to their money and their habits, but it seems this post should have been written a year ago, haha… (or maybe it did and we’re re-circulating? :))
Anywho – all the tips are great advice, so it’s always a welcome reminder to make sure we’re on the right track. Here are the 6 lessons MSNBC says we’ve learned from the recession – along with commentary from yours truly:
- Use cash and borrow less – I guess this would be good? We always debate on the cash vs credit card angle here, but overall it couldn’t hurt to go that route for sure. So I suppose that’s sound advice ;) And certainly borrowing less is always great for the wallet! (unless your leveraging it for business investments/etc – that’s a-ok in my books as long as you know what you’re doing)
- Make sure you build an emergency fund – YES! Absolutely. The reason so many people got so caught off guard during this crazy economy is that they didn’t have anything stored away when they lost their jobs or got hours reduced, etc. You need that extra money in the bank for the things you have no control over. If you’re living paycheck-to-paycheck and it’s hard to amass the 3-6 months most people recommend, start by saving just $20! It all adds up, believe me, and the only person you’re helping is yourself.
- Setting priorities is critical – For sure! And that goes for both saving AND spending money. Concentrate on the things that are most important to you, and weed out the rest that aren’t. Everyone’s situation is different, so do your best to stick with what’s most valuable to YOU.
- Budget is not a dirty word – Preach on, son!!! Haha…. I’m starting to like this author even more ;) We highlighted a great simple budget the other day, but if you’re looking for more in-depth or a variety of other different kinds, make sure to check out my budget templates I’ve been storing over the years. Just like the priority tip right above, we’re all unique in our ways we handle money, so keep searching for the right way to track all this stuff for YOU. It really doesn’t have to be that complicated or time consuming if you don’t want it to be! I promise! :)
- Being a penny-pincher makes you smart, not cheap – About time that comes through ;) Though I still can’t see people shouting it out from the rooftops anytime soon. I think people also associate it with being poor or not having as high of a “status.” Which is a shame since most millionaires and wealthy people get to where they are because of these prudent decisions! (well, that and hard freakin’ work, haha…) If you haven’t read The Millionaire Next Door yet, I highly recommend it.
- Stay in charge of your investments – Yup, always a good thing to do. I’d even go as far as to say “increase your investments!” When everything’s going down down down, it’s a perfect time to buy buy buy ;) You know how the mantra goes – Buy low, sell high. And when things have dipped like crazy, it’s certainly on the lower side. But of course you need money to invest in the first place, so it only becomes a good opportunity if you’ve set yourself up to accept it. Another sexy byproduct of managing your money well!
What do you think? Is the world financially better off now having lived through a bulk of this recession? Or do you see people forgetting about what they’ve just learned, and slipping back into their old ways again?
Here is the link to that MSNBC article again: 6 Lessons Learned From The Recession. It goes way more in-depth than I do, so check it out if you want more professional journalism to back it up :)
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(Bad a$$ painting by juggernautco. He mentions selling it on his Flickr account, and I may just have to look into it!)
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Something tells me once everything gets “better,” people are going to loosen up their belt straps and go back to their evil ways. I hope I’m just being super-cynical, and that doesn’t happen…
I know our financial plan hasn’t changed in the 9 yrs we’ve been married and it’s right in line w/what we should’ve grasped w/the recession. YAY for saving money!
*sigh* What would be ideal would be if these were lessons we all learned growing up, recession or no. Like Trinnie, my husband and I lived according to these lessons prior to the recession, so it hasn’t affected our lifestyle at all.
I’d be inclined to say to #1 – Use credit RESPONSIBLY. And if you can’t do that, then sticks with cash. Basically, know yourself and act accordingly. I use credit cards to my advantage and have made way more money in rewards than I’ve ever paid in interest. (I think I’ve paid less than $50 in interest charges over my 10+ year credit history, but I’ve gotten hundreds of dollars worth of gift cards through rewards programs!)
Oh, and I’m always surprised when people can’t fathom why my husband and I are voluntarily on a budget, despite the fact that our household income pretty much puts us in the upper-middle class category. We don’t budget due to some recession-induced panic, but we want to make sure we know where our money is coming from, where we want it to go, and where it is actually going, regardless of the economy.
And #5 – AMEN!! As of right now I think my husband and I officially drive the oldest, crappiest cars out of all of our friends – a 99 Kia Sephia (his) and an 03 Chevy Cavalier (mine). But guess what? Most of our friends have car payments, and we don’t. That’s hundreds of dollars each month that we can use to put toward retirement, add to our short-term savings, or just go on a fancy date. (Or in the case of this month, attend a friend’s wedding halfway across the country. We had to cut back on short-term savings, but I’m SO proud of being able to pay for those expenses out of incoming cash instead of dipping into our savings!)
I can only hope everyone learns, but only time will tell. My parents survived the recession fine and I did okay considering (divorce, special needs child, no job…..). Good list and I mostly do everything on the list with the exception of investing. Not because I don’t want to, I plan to start next year.
@Trinnie – I love hearing that Trinnie :) A lot of ups and downs have happened in the past 9 years, so that’s impressive! That baby come out yet? :)
@Stephanie – Nice! And that’s how you were able to GET to where you guys are today too – by saving and making smart moves throughout your lives :) I totally agree it’s better for all of us to learn this stuff growing up, rather than in the middle of a crisis. The whole proactive vs. reactive kind of strategy. I remember learning how to write a check and do assets vs. liabilities in middle school, but that was about it. It certainly wasn’t fun enough or interesting enough for it to sink in… though I guess at that age it’s the last thingt from our minds ;) And actually STILL is for some people! haha… but yeah, better to learn early on however that my look, than late in life.
@bleu – It’s always so interesting to hear from people who powered through the Recession – their outtake is SOOOO strong and different than most others. I’ve never heard of someone going buck wild after making it through the Recession, but I suppose there are a handful out there :) I’m excited for you to start learning about investments next year! A whole other ballgame to tackle. It’s all fascinating stuff.
We’re better off simply because my husband’s job has been stable and we still live below our means, but even though we continue to save, I’ve been spending like a maniac and could have saved more. It’s all about amazon.com ;)
I think our world is absolutely financially better since the recession, and there are a lot of statistics and indicators that point that way. However, I still think we have a long way to go. I don’t think everyone will slip back into past ways that easily. So many people depression-era seemed to have clung to that lifestyle forever. This case isn’t as extreme (and our attention spans are much shorter now), so I think there were at least some positives that came out of the latest recession.
@Stephanie, so true that these are things we all should be learning anyway. I was fortunate enough to learn these valuable lessons from my parents when I was growing up, and I’m very thankful for that.
I agree with the other comments so far that people are probably more financially responsible now after some hard-earned lessons, but I’m not sure everyone will stick with it once we really are back to “normal.” Thanks to my stable job/income, our lifestyle didn’t change due to the recession, so I don’t expect it to change with the ending of the recession, either.
First off, we all know that professional journalism is for drips, your summary, and personal touch, is much better than their article.
One I’d add to this article is a point on rebalancing under “stay in charge of your investments.” People who didn’t rebalance after 2008 lost out on huge gains in 2009. It takes guts to do because you feel like you’re catching a falling knife, but pays off. We’ll surely have another meltdown like we just had so people in their 20’s and 30’s need to get cozy with rebalancing, a big lesson learned from this last recession. Rule of thumb people say is rebalance after a 10% down move (buy) or a 25% up move (sell).
#5 is spot-on, and thanks for shining some light on this. I don’t know why we typically associate financial prudence and being thrifty with “cheap,” when the correct association, as you point out, is with “smart!” Most self-made folks were and are notorious misers. Look at Warren Buffet or Carlos slim living in the same house for many decades or Ingvar Kamprad (founder of IKEA) cruising in a 10 year Volvo.
These are spot on lessons learned. My main focus now is to save and invest. Simple as that. Thanks for the enlightening post.
During the recession, everyone said that the way Americans spend/save is changed forever. One year later, most people are back to their old habits.
Some will remember the lessons from this recession. Others already knew those lessons long before the recession. And others may never learn.
Paula, sadly I have to agree with you. When we purchased a house one of my DH’s friends came to help us move. Mentioned he had thought of buying a house but decided to buy a car instead, sigh.
When I hear “recession”, I think of all I heard about the great depression and how devastating it was for so many people. :-( I know there have been many people put in similar situations, but I can’t help but think we got lucky compared to the great depression. Aside from the suffering and all the $hit that’s happened to people I think it was a good “wake-up call” for most people.
I’m guessing that after they (a majority of people) get back on their feet, over time they’ll start getting more comfortable and slowly drift back to how they were before. I also think that others that have really worked hard to learn more about their money will keep up the great work. That sounds contradicting. Anyways, I know that I will NEVER go back, no way baby—I’ve worked too hard and won’t throw it all away.
Our memories are way too short here in America (and probably Western Civilization as a whole). It was only 20 years after the gas disaster of the late 70s that we built huge gas guzzling SUVs lol
I can’t speak for the world being in a better place after the recession, but I have sure learned some valuable lessons mostly related to the six above. I am working on swearing off debt, managing cash flow to start an emergency fund through better spending planning (budgeting), and working to prioritize expenses and lifestyle. I appreciate the lessons learned.
The world may not be better off (or is it?) but my kid most definitely is. In early 2009, my husband and I made an economy-driven decision to break all spending into “needs” and “wants.” One day, I went a bit obnoxious on my then-four-year-old (struck with a case of the “gimmies” in Target) by exclaiming, “You want that new lip balm? Get a job!” And in a stroke of genius (or as I like to put it: insanity) I gave her an actual job. She’s been a Chef, Photographer, Geneticist — this week she’s a Social Activist. The idea of teaching her the value of money by test-driving real careers has been a resounding success in our home (thus far), and even inspired a whole program based around the concept (www.earnmykeep.com). It’s also opened a host of family conversations about the fiscal mistakes we’ve made and what we’re doing to correct them. I can honestly, truly, with every fiber of my being tell you that when the economy tanked, I did not see that one coming.
@Yana – Haha, yes Amazon.com can be the devil at times ;)
@Jeffrey Trull – That’s good to hear! I don’t follow the stats much, but I’m glad it’s trending that way. We can most def. learn from this Recession and all other huge events that happen in our lives.
@Jenna – You’ve got awesome parents!!! You tell them I said so ;)
@Kathryn C – Oh nice, never heard that before? I suck at re-balancing but thinking of having someone manage it for me so I don’t forget anymore ;) Though, ofcourse that means more money. But I’d gladly pay to earn more in the long term!! (and thx for the kind words – glad you still enjoy my “style!”)
@Daraius – YUP! Brilliant guys being brilliantly frugal ;) Nice additions.
@Matt – You can go farrrrrr with “only” saving & investing! You do that forever and you’re set :)
@Paula @ AffordAnything.org – At least we all get reminded at times, eh? Even though the world seems to be crashing around us then! ;)
@Ginger – A car to live in? ;)
@Jen @ Master the Art of Saving – Oh yeah!! I think most of us got off SUPER easily too. We all lost money or had to/have to deal with more $hit, but compared to the BIG recession, it’s not nearly as bad… well, compared the the stories we hear and all. Maybe 50 years from now all we’ll hear is the horrible ones?
@Evan – Hah! Even 3 years ago we were freaking out about gas — when it was gonna hit $10 a gallon :)
@cashflowmantra – All smart moves, yo!
@Alisa @ Earn My Keep – COOL!!!! Wow, that is such a good idea for a kid – I would have totally done that myself as a youngin’! If you ever wanna do a guest post, give me a shout ;) I think others would enjoy hearing more about that too.