Posted by Mike Smith :: August 9, 2008 @ 11:25 am

The current state of the economy is changing consumption habits in unprecedented ways. A combination of factors, notably high energy and food prices, coupled with the woes in the housing and credit markets, is creating the perfect storm for change.

Changes made for the better don’t have to be temporary. When the economy starts to improve, the benefits of such changes will increase even more. If high gas prices inspire you to use alternative transportation or a more fuel-efficient vehicle, you would continue to benefit from that change even if gas prices did start to come back down. Tightening your grocery budget to maximize each dollar you spend is a great habit, regardless of food prices. Similar improvements in your housing or debt situations would have the same effect.

As counterintuitive as it may sound, a prolonged downturn in the economy could actually benefit your finances. Short slowdowns require few modifications to your spending and even those changes that you do make are easily reversed when things improve. A longer slowdown will make frugal behavior become part of your normal routine. Long-term habits, even good ones, are more difficult to break.

Retailers have noticed changes in consumer habits and are trying to align themselves with their customers in new ways. Just about every type of company, from car dealerships to tourism councils, seems to be offering some type of gas incentive along with their normal products. Whether or not such a deal is worth it depends on the situation, but does show a fundamental shift in the type of promotions and marketing used by these companies.

A changing economy is more than just a reason to adjust your investments, your budget, and your spending habits. It can also provide a growth opportunity in your financial education. Creating something positive out of a negative like a slowing economy is great, but continuing good habits after the economy improves is where you’ll see the greatest benefits.