According to news reports, the recession is over. However, new research by the Pew Research Center says that only 3 percent of Americans buy that. A little over half (55 percent) say we’re still in the thick of it; 41 percent say we’re beginning to come out of it.
The survey highlighted several ways we’ve been impacted by the economic downturn. For example, some 55 percent of people in the labor force say they have experienced a time of unemployment, a cut in pay, a reduction in hours, or have become involuntarily part-time workers as a result of the recession. Also, nearly two-thirds (62 percent) of people say they have cut back on spending as a result of the recession.
One of the most surprising findings is that 69 percent say that once times improve they plan to spend as much or more than they did before the recession. Clearly, there’s a lot of pent up desire to dust off our wallets. However, given the low savings rate and high indebtedness rate that left so many people vulnerable when the recession hit, I believe one of the best outcomes from the recession would be for people to permanently alter their cash flow management – giving, saving, and investing more than before, and spending more wisely. That doesn’t mean resigning yourself to a life of obsessive frugality. It means being proactive about managing each spending category. And the absolute best tool for helping to do that is a Cash Flow Plan.
In what ways do you think the recession will permanently alter the way you manage money?
Roy – Sorry to hear about your situation. In terms of structuring your work as a private contractor, my main advice is to set up a separate business checking account. Put all your revenue in that account and then pay yourself a salary from that account. It’s really important to maintain a separate business account. And if you’re paying income taxes quarterly, be sure to keep up with those payments. Here’s an article you may find helpful:
http://www.nolo.com/legal-encyclopedia/article-30292.html
As a result of being forced into retirement due to a workforce reduction, I am spending less and will continue to spend less. Income level is 44% of what I made while working. I am working as a private contractor and must structure it correctly. Any suggestions?