Money Obedience

On Nov 14th the government reported that U.S. retail sales fell 2.8% in October. This is apparently the steepest decline since records began in 1992. No doubt this news proves that the US economy is in dire straits and that the consumer has finally gotten tired. For much too long US consumers have held up the performance of the US economy as well as the world economy by demanding cheaper imports mostly from Asia. This development finally ended and may have reversed itself.

From an economic point of view this decline in retail sales reflects the current problems in the US economy. But when we break down the numbers to the individual level, such declines in retail sales are probably good for many families. This number shows that people are cutting back on their spending. Lower household expenses should help households stay within a family budget and lower debt levels if necessary, since there is only one way to get one’s financial house in order: spend less than you make. The reported retail sales numbers indicate that more and more households are spending less – hopefully also (much) less than their incomes. And that is a good thing for households who are cutting back on their family expenses.

You may have read in our previous posts (such as this one) that my wife and I have been on a family budget as well. We do not want to spend frivolously or buy unnecessary things. We have come to the conclusion that healthy family finances are more important to us than owning a whole bunch of things like the latest electronic gadgets. - I know. Some of these gadgets are really cool, aren’t they? But do they really make my life so much better? Do they really make me happy? In my case I cannot answer these questions with a resounding yes. I can answer one question that matters to me with a resounding yes. Do solid family finances make me feel good? - Yes, they do. I am sure my wife agrees with this answer. And that is why my wife and I work on keeping our family finances in good shape – without being too uptight about it hopefully. Life is too short not to pack some fun into it no matter how much we want to make sure that our long-term family finances are sound.