Sometimes hard times are a blessing in disguise.
No matter how distasteful or damaging it’s been, the economic recession has probably forced many consumers to take a long, hard look at their spending habits.
For myself, I’ve been able to save several hundreds of dollars a year on my cellphone bills and newspaper subscriptions alone, simply by shopping around, comparing prices and changing suppliers.
Recent research has confirmed that the recession is forcing many consumers to change their spending habits, although not as many as you might expect.
According to the Plum Wealth Report in the United States. the wealthy will only change their spending habits if the value of their stock holdings drops by more than 19 per cent and their real estate values by 17 per cent. Fewer than one in six plan to cut back on their spending for destination clubs, private jet services, yachts and yacht charter services.
A survey by The Nielsen Company has found that the recession is forcing average Americans to reduce their gasoline consumption and curtail spending at the grocery store and is making packaged goods manufacturers and retailers re-evaluate their marketing strategies.
Up here in the north, a poll conducted by Harris/Decima for Scotia Bank found that only 19 per cent of Canadians are spending less than they were six months ago and 45 per cent are spending the same. The rest are spending more.
Spending habits haven’t changed that much in Canada because most of us have not seen a change in our lifestyles because of the recession, and we still have the same basic needs and expenses.
However, of the 19 per cent that are spending less, 27 per cent say they already were on a budget and were deciding to spend more carefully or choose cheaper spending alternatives.
If the recession has hit your pocket book, there are some things you can do to change your lifestyle and hang on to more of your money.
“Create a financial stimulus plan of your own,” said Patricia Lovett-Reid, senior vice-president of TD Waterhouse. “Consider that you are your household’s chief financial officer. Earmark what spending is essential and examine every line of your expense sheet.”
Lovett-Reid suggested you begin by going through all your expenses and decide where you get the biggest value for your dollar.
Use the Internet where possible to do some comparative shopping. You can change where you shop and switch to discount stores where you can get merchandise cheaper than at full-price retailers.
Nielsen found that consumers continue to buy products such as seafood, dry pasta and candy during economic downturns but cut down on things like carbonated beverages, eggs, cups and plates, food preparation and storage items, and tobacco.
“Give up vices like tobacco and alcohol,” said Lovett-Reid. “The average Canadian household spends $1,536 a year on smoking and alcohol. Make informed decisions.”
“Where possible, reuse, reduce and recycle, which can add a lot of money to your pocket,” she added “You’ve got to remember that this doesn’t have to last forever.”
She suggested checking things like the fees that you pay on your chequing and other accounts at the bank and trying to accelerate your mortgage payments so you can pay off the debt on your home faster, which can save you a lot of money in interest payments over the life of your mortgage.
Taking full advantage of benefits offered by your employer also can save you thousands of dollars a year, and if you’re looking for some entertainment, opt for community activities and facilities such as the local swimming pools, libraries and public events.
Even in recessions, people still need certain things to live. Utilities, consumer goods and pharmaceuticals are things that people are going to buy regardless of what’s going on. These sectors are not as sensitive as many others to economic cycles and might be good investments during a recession, Lovett-Reid suggested.
With some planning and self control, you can reduce spending and still enjoy life in a recession.
Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors. He can be contacted at boggsyourmoney@rogers.com.