The New Savings Mentality

The recession's silver lining, or double-edged sword depending on who you speak to, is that Americans have become savers once again. Like our grandparents before us, we have learned that a penny saved is indeed a penny earned. Studies have shown that it takes about a month to create a new habit, and consumers have been saving for several months in a row. Collectively, a new savings mentality has taken hold.

While saving money is an excellent choice for the individual, when everyone does so at the same time, the economy shrinks. So, does that mean we should start spending again? Not so fast. The economy is adjusting; that's what it has to do. In order to survive, companies need to reinvent themselves.

By adopting a savings mentality, each penny spent is carefully considered. Does the product do what it is supposed to do? Will it last? Is it well designed? Saving our money and selecting only items that offer value forces companies to offer products with real value; products that last. When consumers start demanding quality, companies will eventually deliver. Companies that adjust to the new savings mentality will be well positioned for success once consumers have the confidence to begin spending once again.

For now, the days of "retail therapy" and indulging in our every want are gone. Americans have discovered the difference between their wants and their needs, and right now, needs are taking priority. We understand that we don't need fancy Italian shoes and designer handbags, but we do need to get rid of that credit card balance. Our kids don't need a toy every time we go to the store, but we do need an emergency fund.

Currently, Americans are saving their money and paying down debt. While companies are overstocked with goods and hoping consumers will begin spending soon, this savings mentality is a good thing in the long run. The economy will eventually recover and those who have saved money will be financially smarter despite the tough times.

Among the more proactive strategies that you can take to build your personal savings is to get out of debt. Pay off those high interest credit cards first and then begin building an emergency fund. Spend your money wisely by shunning cheaply made goods that will fall apart soon after you open the package in favor of well-built quality products. Support local businesses when you can and keep your tax dollars close to home. As a consumer, you are under no obligation to "save the economy" so don't feel guilty for becoming a financially responsible citizen. Take care of your own finances first and spend your money wisely when the need arises.