Have you noticed your friends are offering more game nights at home instead of going to throw darts at Milo’s? Are you riding a bike more often than driving your car? Have you subscribed to Netflix and cut out going to the movies?
These are only some of the things people are doing to cut back on spending ever since the economy went down the drain.
“There’s this general uncertainty that’s causing people to be reluctant to make long term commitments which translates into a decline in purchases of consumer durables,” finance professor Michael Davis said.
Davis said people are more reluctant to make larger purchases like buying a car. In the past, people wouldn’t think it was a big deal to pay $750 a month to own a $50,000 Lexus. Today, people are thinking twice before spending $350 a month to own a $20,000 Ford.
A National Retail Federation survey notes the economy will impact two-thirds of families this holiday season. Eighty-four percent of families are spending less overall while 55 percent plan to shop for sales more often. Other families are buying more practical gifts, traveling less and using coupons more often. The NRF expects holiday sales to decline 1 percent to $437.6 billion.
In a survey of 32 people produced on SurveyMonkey.com, 84.4 percent say they have cut back. The SurveyMonkey.com poll was advertised on Facebook. While mostly SMU students took it, other young adults participated as well. Of those surveyed, 40.6 percent said they were cutting back to save money.
SMU junior Colin Aufhammer has started eating at home and cooking for himself rather than going out to eat. He said cooking at home was cheaper, easier and the food tasted better.
“That was probably the easiest and most cost effective way to save money,” he said.
Bruce Levy, director of the Center for Academic-Community Engagement at SMU, has started spending less at the grocery store. He continues to enjoy the healthy and high quality foods Whole Foods offers but he is more conscientious about buying things on sale.
“The joke about Whole Foods is that people call it whole paycheck,” he said.
Crissy McCauley, who graduated from SMU in 2007, said she is being more conscientious while spending her parent’s money planning her wedding.
“I am choosing to make small changes in my wedding plans that make a big difference in price,” McCauley said in an email interview.
McCauley is replacing flower centerpieces with candles, choosing flowers that are in-season for the bouquet and selecting pasta and chicken instead of beef and fish. She said she gets really excited when she “nails a good deal.”
Davis said people are trying to replenish their savings accounts because many people either lost a lot of money in the stock market or they are beginning to realize they need to have some liquid assets so they have cut spending.
Of those surveyed, 34.4 percent believe the economy is not getting better.
Aufhammer believes it will take eight to 10 years to get back to the economic activity we were at a year and a half ago. He thinks it will be a slow and steady increase.
He thinks the economy will get worse before it gets better, though he expects unemployment to stay moderately high. “I’m temperamentally a pessimist,” he said.
Levy also said that people were wasting their money away “like crazy” on unnecessary goods during boom times. Levy hopes everyone will begin to monitor their money more closely now. He sees a cultural shift occurring where people are beginning to buy less and save more.
“People are really changing their habits,” he said.
SMU senior Stephen Reiff said he is working harder to apply for jobs and network within his internship contacts.
Davis stressed that saving is the key to protecting yourself.
“People need to have that cushion of at least six months of money to spend,” he said.
