General Archive
The Recession’s Silver Lining?
According to a survey conducted by the Post Office, consumers in the UK are thinking about their finances more than ever before, since the start of the recession. In particular, 16 – 30 year olds have changed perceptions of finances, with a quarter of this group claiming to have saved more money since the start of the recession.
The improved attitudes are largely being attributed to the fact that conversations around personal finances are being held more openly now and frugality and conservative spending are commonplace. Attitudes towards frugal living, in fact, have changed drastically since the beginning of the recession. Frivolous spending simply was not possible in the face of rising unemployment, continually rising living costs and less disposable income and so thrifty spending habits were adopted by families on all income levels. It is hoped that these habits long outlive the recession itself.
So is this a silver lining to the worst recession to have gripped the nation (and the world) in a generation? If the attitudes persist, then that in itself could go a long way to eradicating the huge personal debt problem prevalent in the United Kingdom and USA. Or will the attitudes fade as the global economy recovers? Will we start spending as thoughtlessly as we ever had and find ourselves, another generation from now, facing the same economic crisis?
In much the same way that Great Depression changed the lives of the Americans who lived through it and permanently altered their perception of money and spending habits, I believe that the scars of the current downturn will probably serve as enough of a reminder to have a long lasting impact on spending. For those of us who lived through it, at least.
Middle Class Income Set to Fall
Accountants, PricewaterhouseCoopers have released figures today that indicate the largest drop in income for a generation, for those considered middle class in the UK. And this is set to take place in 2010.
Taking into account forecasted increases in mortgages and tax, a family on an annual income of £30000 will find themselves approximately £6 a week worse off – or £300 worse off over the course of the year.
The wealthier are also expected to suffer, by around £5000 per year.
So while the forecasted recovery of the economy is certainly a good thing on a global level, it could see some short term belt tightening and potential debt problems for consumers in the UK. As well as tax rises, a freeze in the tax free personal allowance (as announced in the pre-budget report), petrol rises and general increases in the cost of living, those on above average incomes are expected to feel the pinch.
Financial experts are advising the well off to make the most of the incredibly low current interest rate to get as much of their mortgages paid off as is possible, as the repayments will certainly rise in line with the economic recovery in the UK.
January 2010 will also see the VAT rate return to 17.5%, following 12 months at a 15% rate, which was designed to stimulate consumer spending.
Personal Finance Books for Children
It’s no secret that personal debt is something of a problem for the consumer driven society that we are. Credit cards, store cards, loans, buy now pay later, overdrafts… the list goes on and they all amount to one thing – spending money that we don’t really have. This in turn contributes hugely to growing debt problem facing a number of Britons. In fact, the average adult in the UK now has personal debt of over £30000 – or 133% of their annual income.
In a bid to curb this monstrous debt habit, the experts are advising that children should be taught how to manage their money. And it’s with this in mind that the Associated Press report today on three books about finance for children.
The Berenstain Bears’ Trouble With Money by Stan and Jan Berenstain is a picture and story book for young children aged 4 – 7. The Berenstain Bears are popular characters in children’s books and have been used to deal with a number of issues previously. And this is not a new book either – it was first published in 1983.
The Teen’s Guide to Personal Finance by Joshua Holmberg and David Bruzzese is a newer offering having been published for the first time last year. This offers information for young adults, much like the third book, Prepare to be a Teen Millionaire by Kimberly Spinks-Burleson, Robyn Collins.
Teaching Money Management is being recommended by personal finance experts who believe that educating younger people now can potentially prevent them from becoming debt ridden adults.