Are You Complacent With Spending? If So, Why?

I was standing in line today picking up some lunch and a thought dawned on me. Why do we spend the money to eat out? If you think about it, the money really starts to add up. I looked around the restaurant and wondered to myself if eating out was becoming a stretch as gas and food prices go higher. I wondered if the people who just spent $7 or $8 on lunch really have that discretionary income sitting around. Will there be plenty of money at the end of the month to pay for that meal that was just charged to Visa or will that lunch accumulate in debt? Then I wondered if the patrons of that restaurant even knew the answer to that last question.

Sure, people are worried about these high prices of items that we depend on each day. At the same time, I wonder if Americans just think that these prices are temporary and will go back down as quickly as they rose. What if they don’t go back down anytime soon? What if a year from now we are at the same level of prices or higher?

I see all of these problems in real estate, in the credit markets, in the job markets, and in rising food and gas prices. Then I look out and it seems like people are just pretending that they are either not there or they will be going away shortly. If you look at consumers’ spending habits, they have changed a little. You see less people in one of the thousand local Starbucks. You see less people in restaurants. However, the cutback in consumption is not on par with people’s actions.

If you told me a year ago, that gas prices would be this high and that the cost of food had risen significantly, I would predict that consumers would have really cut back.

Maybe you are in a situation where you have plenty of monthly income that you need and these rise in prices are not a big deal. For the rest of us, these rising prices are taking a bite out of the monthly budget. For those who have not made changes in their spending habits, at what point do you decide to really cut back? At what point do you decide to be more proactive with your spending versus being complacent? At what point does it not make sense to not eat out anymore and start bringing a lunch to work?

I had to ask myself these same questions. When prices were lower and times were good, we had the luxury (if there is such a thing) of being complacent. I think that we are reaching a critical point in this country where we all have to take different actions as consumers. Most important, we need to take different actions with our spending as stewards of our God-given assets.

There are steps to end complacency and be proactive about high prices and economic struggles. I would encourage you to consider implementing some of these suggestions.

First, know where you are spending your money. Sit down and really start tracking your spending. If you are married, start doing this planning with your spouse. It is crucial.

Second, start living as if these high prices are going to be with us for a long time. In the event that they are, it will be much easier to adjust now rather than being forced to adjust down the road.

Third, start planning out how you spend money on gas and food. Follow what is on sale. Shop at grocery stores where you know you are getting the best deal. Most importantly, plan out your meals in order to help save money when buying groceries.

Start planning out your trips in the car so that you are not doing a great deal of unnecessary driving.

There are a lot of ways to fight higher prices. Unfortunately, it all takes effort and planning, which won’t take place if you are complacent.

If you have not made drastic adjustments to your spending, ask yourself why not? Have things just not gotten bad enough yet? You never want to wait for things to get bad. You want to prepare ahead of time so that you are ready in the event that things do get worse with higher prices. It makes more sense to be prepared for that type of scenario today versus scrambling to prepare when it might be a little too late.

Copyright © 2008 Prudent Money and Bob Brooks. All rights reserved.