What Have We Learned From The Recession?

For those of you following the news, there have been whispers that the recession is over. Are the rumors true and we are finally out of the recession or is the economy just declining at a slower pace? In either event, it is almost a certainty that things will not go back to business as usual anytime soon. Hopefully we have all learned some lessons over the past year and a half; lessons that we should not soon forget even when the economy begins to improve. Here are a few things to keep in mind while the recession is fresh in our memories. 

• There are no guarantees in life. Whether it be your health, job or retirement account, no one is immune from changes. This point was driven home in recent months as people lost seemingly “secure” jobs, watched their savings dwindle and found themselves struggling to maintain day-to-day expenses.

• Exercise caution when using credit. One area that has seen big changes recently with more changes to come is the credit card industry. As we watched the housing market crash, banks fail and major corporations file for bankruptcy it was only a matter of time before the credit card industry was affected. Unfortunately many people have learned the hard way that the contract between creditor and card holder is binding only on the end of the card holder. For many, the terms and conditions have been arbitrarily changed to favor the credit card issuer, leaving the card holder “holding” the bag.

• Debt hampers your ability to reach financial goals. In the best of times, having a lot of debt prevents you from investing money in your future. When the economy takes a turn for the worse, it can make it impossible to pay both your debt obligations and other financial responsibilities. If you fall behind on your credit card or other loan payments you will quickly see your balances grow exponentially, making it even harder to get back on track when your finances improve.

• Those without savings will suffer. There are many people who make it a priority to save money for emergencies, retirement and other future needs. There is however a large percentage of the population that has little or no savings to fall back on during hard times. Without some form of “backup” plan, people who don’t have savings will find themselves facing a difficult time as the lending industry increases the standards for loaning money and using credit cards becomes less lucrative.

These are just a few of the lessons we have hopefully learned during the recession. Now is the time to put those lessons to use and make adjustments in the way we view and spend money. Even if the economy is on the road to recovery, there is bound to be another point in the future where things take a turn for the worse. If you were not prepared for this recession, take the steps necessary to improve your personal finances, putting yourself in a better position to weather the next storm.