Financial Planning in Recession Guide - Important Expenses That Shouldn’t Be Cut

Looking at the bright side, the recession is not really a bad thing. In fact, it helps us in so many ways in dealing with ourselves. It pushes us to deal with reality instead of hiding behind the closet of denial. We are now spending less, saving more, and paying off debt. So we are adjusting, and it’s a good thing. But there are spending that is so important that you should prioritize them over any other spending. This means, for some things you cannot be thrifty. More or less, that’s what Jean Chatzky and Arielle McGowen in Five Essentials You Cant Afford to Skimp On. In it, a list of spending that people mustn’t shove aside.

Healthcare Expenses

It makes sense when we want to save in this economic downturn, but something such as skipping doctor visits or canceling our health insurance is not something I would recommend. Not having a health insurance could lead to a financial disaster. There are alternatives in cutting the health expenses, such as choosing generic drugs instead of name brand.

Exercise

Interesting, isn’t it? But there is a study conducted by Blue Cross Blue Shield that said that people who exercise to the gym at least eight times a month have significantly lower health costs than those who don’t. Alternatively, you can also do this by running or simply riding a bike down the hill or buy a pair of dumbbells.

Retirement Planning

Retirement Planning is a crucial part of your life. And in this down market condition, in this year’s December only there have been many corporations that change, downsize or even discontinue their 401(k) plans, according to the Pension Rights Center. The lesson here is this: if your employer/company still offering the same matching dollars, you should keep kicking in money to grab them. You might also want to consider Individual Retirement Account. This plan will allow you to get your money out any time and, after five years, use it without penalty for a first-time home purchase.

Insurance

Homeowners insurance is another thing to pay attention to. In this recession time, it seems to be understandable that some of us want to cut our homeowners insurance. But DON’T DO THAT. Consider this: what you’re paying for is the amount it would cost to rebuild your home and replace your belongings. Here’s a small suggestion if you want to save some dollars: you should raise your policy deductible, for example from $500 to $1000.

Charity

Don’t forget to share with others. This way you can feel better about your self… Remember that we should balance our earthly and spiritual aspects of life. You can do this by donating clothes that you don’t use anymore, etc.

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