One of the more interesting bits of information from last month was the retail sales data released. It appears that retail sales slipped in July. This was a bit unexpected, since many had thought we would see increased consumer spending. And this illustrates some interesting things about recent spending habits:
- Cash for clunkers: There has been some debate over the success of Cash for Clunkers, but there is no denying that some of the spending that might have gone to retailers went instead to down payments on cars got for screaming deals. (This really is a good time to buy a car if you had been thinking of getting one in the next six to 18 months.)
- Concern about credit card debt: The dip in retail sales also illustrates the changes in spending habits. Many have become concerned about the amount of debt they have (especially credit card debt), and are trying to save more and spend less. Of course, if you’re concerned about debt and just bought a new car because of Cash for Clunkers, naturally you’ll curb spending in other areas so that you won’t be even more burdened.
Of course, whether or not we will see permanent changes is up for debate. But it is encouraging that people are at least thinking about their spending and trying to prioritize. Being able to prioritize is an important part of personal finances, and improving your financial situation. If one lesson is learned from this recession, I hope that it is that you need to priortize your spending, and live within your means.
Image source: Wikimedia Commons