Personal Financial Controls – Be Conservative

Michael Lodge

by Michael Lodge

Over the past three months I have been trying to send a message to our clients to be very conservative in their financial spending.  As we look at the economic concerns that have been gaining momentum over the last few months, we are seeing signs of a very weak economy.  That means that when the economy is not showing strength we may be hit with financial challenges over the next year or two on a personal basis.

If you look at the retail markets we are seeing companies go into bankruptcy protection, in fact we are seeing a rise in company bankruptcies.  Just over the last two days we have seen where Ralph Lauren has started to sell off their real estate holdings, closing 50 stores, and laying off over 1,000 people in their company.  We have seen this same move in many other companies.  Look at the worst job report where American businesses were only able to add 38,000 jobs in the United States for May.  US Economists are now saying we are a weak economy and heading for even a downturn.  The Federal reserve has had to delay raising interest rates because the jobs report is so very low.  The World Bank has downgraded the world economy because of various issues around the world.

So we an issue of a very sour economy over the next few months that we have to take into consideration in how we manage our personal finances.  Don’t spend more then what you are making, cut out some expenses, begin to save, look at your retirement plans and are they at risk, reduce your debt.  The most important issue is do not over spend, look at ways to save – key word is save.  As I have said before – just because you make a big paycheck, it doesn’t mean you are rich.  Let’s be a financial conservative.  Get more involved in your reading of business news, start paying attention to the financial data that will affect you.

There is nothing wrong with being a financial conservative.  In fact practicing this form of financial management for your personal and small business lives will save you in a down economy.  Just remember if you have been trying to keep up with the perception of wealth – it doesn’t work, it creates more debt.   The more financially conservative you are the better you will be off in any down turn in the economy.

This is my view as a tax practitioner and what I am seeing in the economy and how it is hitting our clients.  Just my point of view.