Stock market experts are always trying to predict the next upswing or downturn in the economy based on stocks, commodities, futures markets, and foreign investments. The general consumer follows right along with whatever the experts report. Therefore, an individual will start spending money as soon as the pundits say that’s what needs to happen. That’s not always a good idea. Checkbook finance is the real economic barometer. If people paid more attention to their personal finances instead of the stock market’s direction, the whole world economy might be in better shape.
It’s a concept that says the smaller parts make up the whole. It was succinctly illustrated when financial institutions and markets came crashing down in 2010. Banks were loaning money to people who apparently didn’t have much knowledge of what a checkbook ledger is. Those who simply did not have the means, and probably never would have the means to buy a house, were targeted for sub prime home loans. It was the hedge market at it’s lowest ethical position. Needless to say, balloon notes put people into foreclosure and the financial markets collapsed. We can blame it on the greedy stock traders and the banks, but at some point, the individual has to take some responsibility and do a reality check on what they can truly afford.
If each month is a financial crisis for a family, then they don’t need to follow the financial pundits’ advice to spend, spend, spend. That’s just another hedge, and it’s traded against shaky personal finance. At some point, the good old commodity, called money, simply isn’t there to hold up the house of cards. When the pile falls down, the individual is the one buried the deepest. As a society, we have to learn to do without. We don’t need everything the marketers tell us we do. We need to take care of our responsibilities and our basics. Food and shelter are not options. Big screen televisions are.