Belt Tightening in Tough Economic Times

Suzanna de Baca -- Expert Business Source, 5/2/2008 9:33:00 AM

“Forget the big summer vacation,” said a friend of mine last week, “I’m just trying to keep my car filled up with gas.”

The debate over whether we’re in a recession, high gas prices, rising food prices, and talk about layoffs have many Americans rethinking their budgets. Families at all economic levels are taking a wait-and-see approach to major spending and are cutting back on luxury or unnecessary items, news reports indicate.

“BIGresearch, a firm that tracks consumer behavior, said 53.6% of people they polled focused more on what they needed, rather than what they wanted, during their shopping trips over the last six months,” reports an April 25, 2008 AP story entitled “Americans tightening their belts,” that appeared on CNN Money.

The article cited a RBC Cash poll conducted by Ipsos, an international polling firm in April which said, “Sixty percent of the public say they are now less comfortable about making a big-ticket financial commitment, such as buying a home or a car, than they were just six months ago,” in contrast to a similar poll taken a year ago when 48% said they were less comfortable about making a major purchase.

BIGresearch says 35.2% of people polled are scaling back vacation plans, according to the CNN article.

While retailers and corporations around the country would not encourage you to stop spending, keeping your expense reined in during uncertain economic times is a good idea.

Here are some simple, common sense belt tightening ideas that won’t change your lifestyle but may help save some cash:

Consider carpooling – Americans shared rides back in the 70s, but I’m not hearing of many people doing this today. If you go to an office and stay there during the day, chances are you can find a friend who works nearby and save half your gas bill.

Rethink eating out - Many individuals have no idea how much money they spend eating out, especially lunches at work. Pack a lunch and cook more often. And tell your kids this means them, too.

Consider your clothing purchases carefully – Do you really need an entirely new summer wardrobe? Buy a few fun things that will give you the same feeling of satisfaction.

Plan a fun but scaled down vacation – Camping, daytrips, or less elaborate vacations can be as rewarding as a full blown trip to Disneyland or Europe. Take a more modest vacation this year, knowing that you can always visit those other places when you are more certain about the economy.

Suzanna de Baca is president of Private Capital Solutions Group. Securities offered through Broker Dealer Financial Services Corp. Member FINRA & SIPC. Investment Advisor Representative of Investment Advisors Corp., A Registered Investment Advisor. Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal or investment advice. Although the information has been gathered from sources believed reliable, please note that individual situations can vary, therefore the information should be relied upon when coordinated with individual professional advice.