Recession Survival Tips

With consumer confidence and spending at historic lows and venerable retail outlets either going out of business or laying off thousands of workers, most economists believe that we are not going to spend our way out of this recession.  Thus, another American tradition, the blowing of “free” money on expendable consumer goods, goes the way of baseball and apple pie.  Considering the tumultuous state of the economy, banking your refund appears to be the safe bet.

However, there are other ways to make effective use of your refund checks.  While these uses are more proactive, they also require you to spend a portion of your refund.  If the idea of spending any money on anything besides the most basic necessities is anathema to you, I completely understand.  Yet, if you believe that smart, targeted spending can actually enhance your position despite the recession, then I offer a few ways to spend your tax refund.

Personal Infrastructure

By now, most of us are aware that our country’s infrastructure is in terrible shape.  Bridges are on the verge of collapse, roads look like a Mad Max set, and the schools…well there is no way our children is learning considering the shape our schools are in.  Yet, when was the last time you did an honest assessment of your personal infrastructure?  For most of us, when it takes three attempts to start the car, the tires are threadbare, or the house/apartment is always cold because of poor insulation, we make an honest assessment everyday.

Even still, we often subscribe to the “if ain’t broke, don’t fix it” mentality.  Far too many people do not realize the benefits of preventive maintenance.  Tax time provides a great opportunity to allocate funds to those unbudgeted and neglected areas of our life.  You can find and fix those things in your home that if left unchecked can lead to huge problems later.  Since buying a new car is not an option for many people, it is even more important to keep the one you have running smoothly.

Personal infrastructure also refers to our financial and physical health.  If you believe that your job is safe, maybe you can afford to inject more money into your emergency funds, IRAs, and 401ks.  As we all know, investments yield dividends down the line.  Thus, we can not afford to neglect our physical and mental health.  You can use your money to pay for an extra trip to the doctor or dentist.  Investing in a gym membership is an excellent way to spend your refund in a manner that will yield immediate personal benefits.  Even in lean times, neglecting our personal infrastructure is perilous proposition that will only cost us more in the long run.

Personal Growth

At STR, we have discussed the challenges of shifting careers and preparing for the new economy.  Often these changes occur in dramatic fashion with little warning.  Since the election of 2004, You Tube and social networking having revolutionized the way we access, process, and analyze information.  Science and technology march forward, regardless of, or should I say, in spite of whatever else is occurring in the world.

Besides the daily grind, the idea of updating our education, skills, and training may seem economically prohibitive.   The tax refund allows you to pursue these opportunities, which will definitely give you an advantage over the competition.  Taking classes or enhancing your skills through training will make you more viable and able to meet the needs of a transitioning economy.

Now is also a good time to visit a career coach or have your resume updated by a professional.  These services will often guide you in placing your best foot forward in an increasingly difficult and competitive job market.  In the hustle and bustle of life, personal growth and discovery too often gets subjugated to the demands of making ends meet.  Take some time and money and use it to enhance your mind.

Personal Pleasure

I know, it is important save as much as you can during a recession.  We must eliminate all extraneous expenditures and pare our lives down to the bare essentials.  However, I submit that now may be the ideal time to show ourselves or our families some love.  A nice vacation, spa/massage treatment, or splurge item can add a critical shot of pleasure into our lives.  No, this definitely should not become normative behavior, but neither should we lead ascetic lives.  I can think of many worse ways to spend your tax refunds than by treating ourselves well.