For many people, the Great Recession provided a harsh reality check to stop spending recklessly and return to basic saving practices. During the height of the recession in May 2009, Americans were saving an average of 8.2 percent of their personal income, according to the U.S. Department of Commerce. But as of February 2011, average savings had slipped to 5.8 percent, while average spending increased for the eighth consecutive month.
“After a couple years of exercising discipline in response to tough economic times, many people might feel they’ve rebounded enough to start spending more freely,” says Paul Golden, spokesperson for the National Endowment for Financial Education® (NEFE®). “To ensure they don’t land themselves back in another personal financial crisis, people need to continue to be mindful of how they’re using their disposable income.”
NEFE is offering an opportunity to help people scrutinize their spending habits with its latest video contest. The Reality Check Challenge asks people to create a video showing what they have wasted their money on and what they should have done with their money instead. Entrants with the most popular stories will win back some of their money, with prizes ranging from $100 to $1,000.
“The Reality Check Challenge encourages people to unjam their junk drawers and gut their garages to find those unnecessary purchases they have forgotten about or to acknowledge daily spending habits that have gotten out of control,” says Golden. “We all have these types of slipups; admitting to them may help people become aware of how they are spending their money so they can avoid repeating mistakes the next time they’re at the checkout counter.”
NEFE is hosting the challenge on spendster.org, an online video confessional where people can share their stories of impulse buys, poor spending habits and purchases they have later regretted. The site recognizes that everyone has purchased useless stuff, and it encourages them to calculate what their money could have been worth had they not wasted it away on stuff they didn’t need. It also provides users with helpful resources and articles to help them clear the clutter from their lives and get back on track.
About the Reality Check Challenge
The Reality Check Challenge video contest encourages people to give their spending a reality check—from wasteful habits that have gotten out of control to past purchases that, in reality, they never use. Contest entrants who submit a video answering the question, “What have you wasted your money on?” will be eligible to win back some of the cash they have burned through, ranging from $100 to $1,000. The contest, sponsored by the National Endowment for Financial Education (NEFE),runs April 27, 2011 through May 25, 2011. Visit www.realitycheckchallenge.orgto enter and learn more.
About the National Endowment for Financial Education (NEFE)
NEFE is an independent nonprofit organization committed to educating Americans about personal finance and empowering them to make positive and sound decisions to reach financial goals. For more information, visit www.nefe.org.
Six Ways to Be Realistic About Your Spending Habits
1. Find out if your spending needs a reality check. If you answer “yes” to any of the items on this checklist, it might.
2. Check in with your wants and needs. It is a very basic principle that is sometimes hard to stick to. If you map out your wants and needs, it is easier to remember them next time you consider making a purchase.
3. Take the LifeValues Quiz. There is a reason you can’t stop buying decorative pillows or find it easier to blow money on a vacation rather than save for retirement, and it has to do with your values about money.
4. Pull together as a family. Talk about your household budget and get everyone involved with spending cutbacks.
5. Learn how to stop compulsive spending if you feel your habits have gotten beyond your control.
6. Calculate how long it will take you to pay off your credit card (information that is also available on your credit card statement). You might just be shocked back to reality when you see how long your debt will be weighing you down.