Should you save money in a recession? The short answer is yes. Saving money while the country is in a recession is very difficult because I think that many people just don't have the money. This is especially true if you are part of the rising number of unemployed individuals.

The problem is that, without savings, you have no provision for the future. You have no future...and neither does the country. You see, when you save money, unless you put it under the mattress (which, contrary to what I've been hearing lately, is a bad idea), you place it with a financial institution. You buy a financial product with it.

You could be buying bonds, or stocks, or life insurance, or bank CDs. It doesn't matter. You're buying an asset. That financial institution then goes to invest that money in various places, or loans it out to businesses (in the case of corporate bonds).

Out of all of the various kinds of financial products, life insurance, bonds and other bond-like instruments are some of my favorites. They represent a true economic stimulus (as opposed to simply printing paper money out of thin air and then saying "here, look, we're rich now!"). These types of products are directly responsible for putting people back to work, encouraging innovation, business expansion, and a general increase in the standard of living for everyone.

That's because a bond - a corporate bond - is a debt instrument. It is a loan. Unlike a Government stimulus, these types of bonds represent a voluntary method to kick-start the economy. Note that I said voluntary. They can't perform "miracles". First, you need to have people willing to save. And, you can't create money out of thin air using bonds, unlike a Government-driven stimulus package which just ruins the value of our savings.

I know it's difficult to save money if you know that the Government is just going to debase your savings, but it truly is the only way to get back on solid ground permanently. The other option is to continue going through the rough gyrations that we've been going through since the Federal Reserve was created in 1913.

By taking care of your personal economy and working to increase your savings, you can seek maximum profits with minimal risk. Combine that with a sound investment strategy and you'll end up selfishly helping yourself while helping out the economy on a large scale as a secondary benefit. Contrary to what Obama is telling you, there are no sacrifices required to save this country, and you don't need to act as your brother's keeper in order to get the economy going again.

You might also like

1. Financial Planning For 2009: How To Stimulate The Economy With Your Own Savings

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This entry was posted on January 27th, 2009 by David C Lewis, RFC. Edits may have been made to keep this entry current. · No Comments · Budgeting & Money Management, Insurance & Savings, Investing