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More Hard Times Ahead?

More Hard Times Ahead?

Three things you can do now to improve your financial future.

Many economists and financial planners are still engaged in the great debate as to whether we are heading for a “double dip” recession. While the jury may still be out on that specific issue, suffice it to say that there will still be financial hard times ahead for many. Simply look at the unemployment data, the continuing decline in consumer spending, and the ongoing struggle for many to keep their homes, and you will quickly realize that we indeed remain in troubled financial waters.

In my opinion, individuals should focus on where they will land financially two to three years from now, as there is little which can be done to make immediate change in your current financial condition. In order to have a hand in determining your financial future, you need to take a proactive approach to all financial matters. The primary economic function for each of us is earning a living. After earning a living, saving, spending, and investing are the primary financial activities which will impact our personal financial well being. To the extent that we manage those activities well, we enhance the probability that our financial health will be good.

There are several things to do now in order to improve the chances for a brighter financial future. Above I referenced the three primary financial activities for individuals: saving, spending, and investing. Each has an important role in determining long term financial well being, and we can do things now within each of these realms that will improve our future financial outlook.


For months I have used this column to highlight the importance of personal savings to long term financial health. Americans still remain well behind most nations in the proportion of income saved, even though we struggled greatly over the last 2 years mainly because we have no savings base. Therefore, the very best thing anyone can do to improve their financial future is to start saving now or to increase the amount we save on a regular basis. Many argue that they are unable to increase or even to begin saving on a monthly basis. I would argue that I have worked with people on a fixed income (retirees, single parents) and have helped them to improve savings habits.

It is easy to see that $10 per week or $100 per month, or any amount you choose for any period of time, can add up to hundreds or even thousands per year. Accumulating a significant emergency fund as a result of periodic savings is the foundation to financial security. Many who have lost their homes to foreclosure had little or no savings to bolster their ability to get through troubled times. Taking a look at non critical expenditures such as entertainment, dining, hobbies and travel is the way to begin. Each of us can make some adjustments in one or more of these areas and increase our savings reserves accordingly. As our reserves grow, they feed into other financial activities and improve the chance for overall financial success.


Spending is a very important component of our financial health. Too much spending obviously depletes savings and reduces our financial strength. However, that is the obvious perspective on spending. Let’s focus on the not so obvious perspective. Spending wisely eludes many of us. If we “need” something, we often just go out and buy it. If something breaks, we replace it; often very quickly if it is something we need or use frequently. Frequently we are poor consumers from the perspective that we do not “shop” well and seek the best prices and terms for our purchases. From my perspective, consumers will be in the driver’s seat for many months to come, particularly on big ticket durable goods purchases.

Consumers will have the opportunity to realize some of the best pricing and narrowest profit margins ever offered by retailers. Remember, it is better for a retailer to sell his goods at or below his cost in order to create cash flow that allows him to keep operating than to forego a sale. He can’t afford to hold out for top dollar, and this fact creates opportunity to improve our financial well being. There are things that we need; appliances, home repairs, even a new car for basic transportation are not luxuries today. If we can accomplish needed purchases achieving the lowest price possible and securing low cost financing when necessary, we have improved our financial future. Remember, some spending does take financing. BCU has a broad spectrum of lending programs which will complement your need to purchase and minimize your costs in the long run.


Investing is of course the most frequently cited means to financial well being. It is important to realize that both how we save and how we spend directly impact how much we have to invest, and therefore impact our financial future. When I discuss investments, I generally talk about things that provide a “return.” Stocks, bonds, mutual funds, Certificates of Deposit, etc., all are intended to provide some return; either an income stream from interest bearing investments, or capital gains from investments which are later sold for a greater price than at which they were purchased. Rental property is another common investment vehicle, but not real estate purchased as your primary residence.

The key to investing successfully is good information and good advice. I have always used many sources to determine the content and mix of my portfolio, and that practice began when my portfolio consisted solely of a $2500 certificate of deposit and $1200 worth of a well managed mutual fund, so you don’t need huge amounts of money to invest to get good advice. There are many sources of information and advice; some is expensive (and maybe worth the price) and some is available free of charge through banks, investment companies, and credit unions. I recommend an advisor that has various alternatives for your consideration, not just a few products offered exclusively by their firm. To this end, BCU Investment Advisors have proven an excellent source of ideas and plans, with a wide realm of choices. Each person’s goals for their financial future are different: college savings, purchase of a home, a vacation, retirement income, etc.

Remember, the objective is to end up better off financially in the future by taking action today.

©Patrick J. Catania 2010
The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of Baxter Credit Union, its Board of Directors, or its employees. The author is responsible for the content. Readers should consult with, and seek professional advice from their own attorneys, accountants, and financial advisors with respect to their individual financial needs and circumstances.

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