When it comes to the recession, there is one bright spot, according to financial experts: more people are budgeting than ever before.
Eighty percent of people now have a personal budget, up from 47 percent since 2006, according to a new survey by Synovate.
Chicagoans on the street provide anecdotal affirmation of the trend:
"Gym memberships and eating out, my husband and I cut way back."
"Research, before you spend your money."
"If I don’t need it, I don’t buy it!"
Finance expert Matt Bell who touts frugality on his website mattaboutmoney.com
says clearly there are some lessons everyone can learn from the financial downtown.
He offers five to get you started:
It’s not about cutting back and suffering, but being pro-active and using money where it is most productive. Bell encourages use of free on-line budgeting sites like Mint.com
. He’s surprised that less than 20% of people take advantage of their simplicity.
"Frugality is hot!" Bell says he can’t think of anything you can buy today without the opportunity for some sort of discount. Retailmenot.com
are among his favorite frugality sites.
Don’t Stretch into Homeownership: Limit spending to 25% of monthly gross income to pay your mortgage, property taxes and insurance. Any more and you are in a danger zone in this economy.
Double your Rainy Day Fund: Before 3 months expenses put aside was safe, now 6 to 8 months is the new norm when you consider that’s the average time a person is unemployed.
Save Smart for College: Hopefully the downturn is a wake-up call to put money into 529 college savings plans. Or make sure a portion of your child’s allowance is put to the cause. Especially when you consider the horror stories of late, with new grads graduating into 6-figure debt without a job.
$MART MONEY: Navigating the Road to Financial Freedom
Published at 1:32 PM CDT on Oct 7, 2010 | Updated at 1:44 PM CDT on Oct 7, 2010