We all know that saving more and borrowing less is critical for our financial health. Considering how harsh the last couple of years have been on so many people, from young adults looking for work to retirees watching their pensions vaporize, it's doubtful that our old profligate habits will reassert themselves as the economy recovers. Memories aren't that short.
The pressure to take financial responsibility isn't going away, either. Employers insist that workers take a do-it-yourself approach toward funding retirement (think 401(k)s). Colleges expect parents and students to come up with more tuition dollars (think student loans). Families are forced to reach deep into their pockets to pay health care bills (think high-deductible health insurance). For millions of Americans their jobs and careers are insecure, turning bill paying into a juggling act (think pink slip).
The good news is that so many people are trying to do with a little less in order to save more. They're getting additional encouragement from a positive change in the cultural conversation about savings, too. The notions of saving, thrift, and frugality (pick your favorite term) is losing its negative association of penny-pinching and spiritual cheapness. Thrift and saving is actually the opposite.
For instance, in "History of the Thrift Movement in America,'' an intriguing 1920 book by Simon Wilson Strauss, he argues that thrift calls for prudent spending as well as wise savings.
"The skilled workman, the artist, the musician, the landscape gardener, the designer of beautiful furniture, the members of the professions -- all those, in fact, who, through the devotion of their abilities, contribute to the real betterment of mankind, must be given support through judicious expenditures."
(As an aside, the links between the 19th-century thrift movement and the 21st-century sustainability ethic are strong.)
The bad news is that saving is hard because wages are going nowhere. This is where a budget can help boost savings and encourage the kind of "judicious expenditures" that make for a better life. A budget is a tool for getting control of household finances. The payoff from a budget is that you end up spending more of your money on the things you value and save more to take advantage of opportunities.
Of course, most people don't enjoy establishing a budget. That's why I think a good time to set one up is when you do your taxes. Yes, you read that right. Hear me out. I got the suggestion from Henry "Bud" Hebeler of Analyzenow.com. You're gathering financial numbers to do your taxes anyway, so why not create your budget at the same time?
"I calculate a new budget at about the time I do my income tax every year," says Hebeler. "That's convenient because I have all of the numbers in front of me at that time -- and it's also the time of year when it's raining outside in Seattle.''
In Minnesota we're more likely to be cold-bound. But I've already started pulling together numbers for my 2011 taxes. I might as well embrace the thrift two-step at the same time: Do my taxes and a budget. I can't say it will be fun. I can say it will be an efficient use of time and pay off for the rest of 2012.
Chris Farrell is economics editor for "Marketplace Money." Send your questions to email@example.com.