Monday, July 21, 2014

Keeping Consumer Spending Low

Our family has been long-time budget spenders; however, lately we’ve been working harder than ever to keep costs down.  With two small children, and income tight, we’ve been avoiding the temptation to go out and spend our hard-earned money frivolously.

And according to CNBC, we’re not the only ones keeping our money close to the belt. 
A recent article on CNBC.com noted that “U.S. consumer spending has remained largely flat for the last three months, Gallup reported on Monday, despite other indicators that suggest consumers keep spending at a brisk clip.”

It went on to say, “The polling agency found that "self-reported" daily consumer spending was $89 in July, unchanged from the $90 of June and May. Based on a series of tracking interviews with more than 14,000 Americans during July, Gallup said that flat spending was perceptible across income levels.”

Our family fits this trend of not increasing consumer spending, and we might have even reduced spending in certain areas.

Overall economic uncertainty
There is a reason why we’re not getting overly excited about spending even though we’re being told the economy is in a recovery.  The stock market has lately been cruising to new highs, the housing market seems to be going higher (at least in certain regions of the country), and jobs are supposedly being created.

However, having studied statistics in college, I know better than to just listen to numbers.  Things like part-time service jobs being created rather than full-time higher paying roles, housing prices skyrocketing in places like Arizona and California but stagnating in other areas, and the Federal Reserve’s “easy money” monetary policy can skew the numbers.  And now with Chicago and other cities beginning to look kind of like Detroit when it comes to finances and pensions, we’re tending to play a more conservative hand when it comes to our personal finances.  Economic uncertainty has us keeping our spending limited, at least for the moment.

Kids and clothing
TLC.com notes that, “A North Dakota State University study from 2010 found that the average American household spends about 3.8 percent of their income on clothing. The Census Bureau states that the average household income is about $50,000 per year, so that means roughly $2,000 per year, per household.”

We don’t spend nearly this much on clothing.  In fact, we spend but a fraction of that $2,000 total on our entire household’s clothing needs.  When it comes to our shopping needs, we tend to go the resale and hand-me-down route, especially for the kids who tend to burn through or outgrow clothing faster than us older people.  Hitting resale shops and garage sales is effective not only for keeping our family clothing budget between $300 and $400 a year, but also for regaining some of that expense later.  Having garage sales helps us recoup some of our expenses, and making use of lightly used children’s stores like Once Upon a Child -- where we just pulled in $38 for some of our gently used kid stuff -- also helps minimize our costs in this budget area.

Travel and entertainment
We’ve also been working to keep our travel and entertainment costs lower as well as we work to reduce our consumer spending.  This year, we’ve started using gasbuddy.com to check area gas prices before buying, often saving us 5 to 10 cents a gallon on gas.  We’ve also been spending more time with family, visiting the set of grandparents who live nearby so that we can let the kids play in their yard and enjoy family time together as well as combining meal efforts, saving money in the process.

Our three-week summer vacation this year only cost us about $1,000 for our family of four since we were able to stay with family.  So pairing up with other friends and family members can help cut costs in a number a ways as well as potentially build relationships.



Disclaimer:

The author is not a licensed financial professional.  The information provided in this article is for informational purposes only and does not constitute advice of any kind.  Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.

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