Has The Recession Has Made Us More Financially Savvy?

26May10

These days the state of the economy is big news with by the hour coverage of share prices and interest rates dominating the news channels. Some days it feels like the only people who are making money are the economics correspondents (I’m fairly sure that Robert Preston caused the recession somehow for his own gain). The state of the economy has always been reported but perhaps now we are paying more attention because it seems to be having a bigger or at least worse effect on our lives.

Personally my attitude to my financial health used to be: as long as there is more money coming in  than going out things are looking good.  This was perhaps not the best approach to saving money but at least I was blissfully ignorant. These days I pay much more attention to income tax and ISA allowances. I know exactly how much money I have and how much I will need to spend before the end of the month. I keep track of my spending and save what I can although like most people I have found that I cannot save as much as I would like to.

As I have mentioned previously people are much more inclined to save during a recession even if they are not able to. Although most are being realistic/negative about where we are headed, some people are trying to remain upbeat. The increased interest in personal finance is seen by some to be a positive effect of the recession. For instance a recent post on moneyunder30.com suggests three positive outcomes of the financial crisis:

On the bright side, there are three reasons I believe recessions are actually good for the economy:

  1. People’s attitudes change (for the better)
  2. We see growth and innovation in underdeveloped sectors and shrinking of overcrowded, bloated sectors
  3. We have the opportunity for self-evaluation

Whilst it is good to consider the potential positives to a negative situation it is a shame that it takes such a catastrophic event to make us more interested in our finances. Surely we should have all taken a keen interest in tax rates rates and pension schemes during the prosperous years rather than waiting until now (I’m mostly speaking to myself here!).

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