If American consumers have learned anything from the economic recession, hopefully it is that they've borrowed too heavily in the past while giant Wall Street investment firms succumbed to excessive greed and banks, finance agencies, credit card companies and others gave money too freely, or expensively.
Wall Street has wrought havoc on consumers.
Whether managing a business, deciding to invest or hire, running a household, paying for college or deciding on a moderate to large purchase, it isn't that the economy just feels different, it is different.
Many people are still without jobs or are working intermittently as unemployment rates across the state and nation are higher today than they've been in quite a while. At the same time, more people are living paycheck to paycheck.
That leads us to today - Black Friday, billed as the busiest shopping day of the annual holiday season, or at least the official start. Stores, mostly big-box retailers, opened as early as 3 a.m. today to lure shoppers seeking that special gift.
The origin of Black Friday historically comes from the retailer's shift to profitability during the holiday season. Back in the day when accounting records were kept by hand, red ink indicated financial loss while black ink indicated profit, thus coining the popular fiscal terms of being "in the red," (losing money) or "in the black" (profitable).
Of course, now there's "Cyber Monday," the Monday after Thanksgiving that has become the busiest for on-line purchases. With all this hype, consumers need to remember four basic practices, taken from www.msn.com:
Spend in line with a budget
Remember the longstanding method of making a budget and then spending in line with the same. That is still the right way to go about spending. Having a clearly laid-out budget will help you prioritize your spending. For example, the highest priority must be accorded to investments that have to be made in line with investment plans and commitments like life insurance premiums. Only when the high priority needs have been taken care of, should the balance funds be used for other expenses. Although the idea of abiding by a budget for spending may seem "uncool", it is nonetheless, the right thing to do.
Again, tracking where you have spent your money may not qualify as an interesting way to spend time, but it is important nonetheless. It will provide you an unambiguous picture of your cash flows; this will put you in better control of your finances. More importantly, it will provide you an insight into your spending habits. This in turn can help you understand the areas that account for a significant portion of your expenses and give you the opportunity to do a reality check on their utility.
Don't succumb to impulse spending
It is now considered trendy to hangout at malls, coffee shops and lounges. And window displays and latest blockbusters are known to test the resolve of even the strongest. A young individual with access to disposable funds can be rather vulnerable in such a situation. Resist the temptations and don't succumb to impulse spending. This is especially pertinent if the spending will come at the cost of your monthly investment towards your retirement/home building corpus. Always try to spend in line with your budget.
Beware of credit cards
Easy availability of credit cards has provided a major boost to spending. A credit card gives you access to high spending limits; it also liberates you of the worry about handling cash. But credit cards have their downsides, as well. For example, making the "minimum payment due" could get you entangled in a debt trap and force you to make interest payments at obscenely high rates.