Earlier this year, as the recession deepened, more and more people became aware of the need to be wiser in handling their finances. A lot of people suffered and coped, and private and government institutions learned the hard way.

Before the financial crisis hit, a lot of folks spent less consciously, flushing some of the money they didn’t really have down the drain, thinking that the inherent “security” of their jobs could take care of everything. But did it?

Sadly, it was way too late to back track even just a bit, as the global financial crisis swept virtually every US household. Jobs were lost. Companies filed Chapter Elevens. The market tumbled.

Thanks to the stinging reality of the crisis, everyone now knows better than to just ignore the personal finance red flags when they see one.  Some of these red flags include:

• Spending on stuff beyond the household budget
• Failing to create a shopping list when going to the grocery store
• Failing to budget altogether
• Driving to a place within walking distance
• Paying for an item’s full price without considering a cheaper alternative

The last one could be the perennial problem that most people can’t seem to get their heads around. We simply want the best thing we can get without weighing the options. When you go out to buy the latest mobile phone, for example, have you really thought about whether you really need all of those features included or not? Surely, all the neat stuff included in your mobile subscription will lay dormant until the next generation of mobile gadgets is out.

Financial red flags – how to spot one

So, how do you spot financial red flags? These red flags are easily recognizable. They all fall under what we call variable expenses. Variable expenses are those beyond daily necessities, such as the latest designer shoes you saw in a catalog or the newest laptop model you came across in the mall one weekend. For the true shopaholic, flashing their plastic has probably become part of their reflexes for any item that tickles their fancy. This, of course, can spell trouble come when it comes time to balance the checkbook.

Weighing your options

The next time you feel the temptation to spend excessively, asking yourself these simple questions can certainly help suppress the urge:

1. Do you really need the upgrade now?
2. When you are dining out, do you think the restaurant right next to the 5-star one serves their dishes just as well?
3. Do you need to buy the latest DVD or can you just rent it?
4. Do you really need to get premium gas, or will regular do?
5. Do you really have to drive there or can you just walk?
6. You need to go shopping, but where can you get the best deals? Where can you get coupons?
7. You need to fly to LA this weekend; you know there are travel deals that you can find for rebates and coupons, so find them.

We can go on with a mile-long checklist of things to consider before pulling out your credit card the next time you feel the urge to purchase. Surviving the financial crisis with little money to go around is a tough job. However, if you are determined enough, you’ll be able to pull it off just fine.
While it could be quite a stretch to discipline yourself when it comes to taking care of your personal finances, it could ultimately pay you back a handsome dividend in the future. Sure, setting goals is key to financial success, but your goal will stay as such if you don’t put in the required effort to ultimately achieve your goals. Another point to consider is this: Don’t let anyone or anything control your personal finances. Take care of it yourself. Remember, in personal finance, one of the keywords is spelled ‘p-e-r-s-o-n-a-l.’