Four Good Ways to Maintain Good Savings Habits After the Recession
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FacebookThis is a guest post from Richard Barrington, who is a banking analyst for MoneyRates.com. Richard previously spent over twenty years as an investment industry executive.
Many people got religion about saving money during the recent recession. This reversed a trend of steadily climbing U.S. debt burdens–or is it just a temporary pause in that trend?
The answer depends largely on whether people continue the good savings habits they acquired during the recession. You may not be able to do anything about national savings rates, but you can take some steps to make sure your own savings rate stays on track.
Keeping the savings habit going
On the surface, it may seem counterintuitive to find that savings rates actually improved during the recession. After all, incomes were down, and low bank rates created little incentive for saving. Even so, people were scared into good savings habits, and found they could get by with less.
Here are four things you can do to continue good savings habits as the economy turns from recession to expansion:
- Lock-in low interest rates. If you refinanced your home loan, make sure you locked in those lower interest rates with a fixed-rate mortgage.
- Eat in more often. Many individuals cut down on their restaurant habit during the recession. Continuing to eat at home more often will make going out seem special again–and could be good for your waistline as well.
- Reduce your credit card usage. By choice or by force, many people have cut down on the number of credit cards they have. Even once credit becomes more freely available again, keep in mind that having fewer credit cards gives you fewer ways to get into financial trouble.
- Avoid “expense creep.” Over the years, it seems bills for services like mobile phones and cable television have ballooned drastically. The recession forced people to cut back to what they really need, and you can keep pocketing those savings if you guard against letting unnecessary services or luxuries gradually creep back into your lifestyle.
If Americans were able to increase savings rates during a recession, just imagine how powerful those habits could be once incomes start rising again and there’s more to put into your high yield savings account. If you really want to build wealth rather than just fight off trouble, maintaining good savings habits in an economic expansion is the way to do it.
Published on March 10th, 2010 - 6 Comments
Filed under: Banking, Frugality, Saving & Investing
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6 Responses to “Four Good Ways to Maintain Good Savings Habits After the Recession”
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March 10th, 2010 at 7:24 am
I think the key set it and forget it. If someone has a savings habit they are best off just ignoring that money. It is amazing how forgetfulness can be such a helpful and destructive financial tool.
I like the idea of reviewing your expenses to see what has crept into the ‘expensive’ category.
March 10th, 2010 at 10:32 am
I know I was guilty of not staying on top of my expenses the last few years. They gradually crept up until I went cutting last year. Ended up finding about $300 a month. My vow is to be more disciplined and periodically review them to see if anything is creeping up.
March 10th, 2010 at 2:09 pm
“Over the years, it seems bills for services like mobile phones and cable television have ballooned drastically.”
You got that right. I am beginning to question the relevance of cable tv in my life at this point. So many other options like Hulu and Netflix. If I didn’t have 2 other people I was splitting the cable bill with, I would get rid of it.
March 10th, 2010 at 3:28 pm
I haven’t even had cable before… you can probably watch everything online with peer to peer sports streaming, hulu, and other media.
March 11th, 2010 at 1:12 pm
Kill your phone bill by getting an Ooma. It costs $200 upfront, but then free for life (just pay the taxes of $12/year starting in the 2nd year). It is unlimited calling. Also get a prepaid cell phone like AT&T go phone at $0.15/minute to use when away from home (and your Ooma).
For TV, kill the cable. Get unlimited NetFlix at $4.99/month and stream the TV shows from the Internet onto your TV. You still get to watch TV, but $4.99/month sure beats $49.99/month PLUS you get to watch movies too!
March 13th, 2010 at 3:07 pm
For me, prepaid rules. I did a bit of research and discovered NET10 was the best for my purposes. I don’t use a lot of minutes — maybe 200 or so a month — and I’m not a mad texter or websurfer either, but 10¢ a minute for calls and 3¢ for texts is crazy good. And no fees per day or other bs.
I got a very nice Samsung phone with a slide-out qwerty keyboard and no one knows it’s prepaid. Costs me a big $30 a month for all my stuff.