This Christmas season, lower gas prices present a unique opportunity for a few wise money moves. When the national average gas price first started rising over $4 per gallon, many families were pinched financially. Because gas was a necessity for transportation to and from employment, something else in the budget had to give. Families cut back on dining out, vacations, household incidentals and even groceries. More families than ever before clipped coupons and paid attention to sales.
Now that budgets have eased a little with lower gas prices, many families have new-found cash. But news reports indicate that families are spending it at retail establishments, rather than saving:
- Sales of SUVs have spiked because the lower fuel economy is affordable again
- Retailers catering to lower income families, such as Walmart and Costco, report higher sales
- Restaurants are reporting more robust revenue
Unfortunately, for the financially strapped family, these are short-sighted financial decisions. Buying an SUV is an especially unsound decision. We should fully expect that gas prices will go back up again. Then, SUVs will be back in low demand, meaning you will be stuck with an unaffordable vehicle on which you will lose a lot of money. Higher retail revenues mean families are not saving their extra cash.
The challenge for you is to ignore the hype and do what's best for your family, not SUV manufacturers, Walmart and restaurants. Here are some wise money moves to capitalize on falling gas prices:
- Keep your budget tight and put the money you save on gas in a savings account – it will help you more quickly achieve a healthy emergency fund
- Use the extra cash to speed up repayment of debt – it will help you more quickly reduce your financial strain
- Continue clipping coupons and shopping sales – it's free money to help you save!
- Keep your car, especially if gets reasonably good fuel economy – buying another car is very expensive, and you save piles of money by making your car last as long as possible
- Sell your SUV and use the cash to buy a more economical vehicle – use this opportunity to get the most out of your SUV while others are crazy about buying one
- Use the extra cash to eat more healthy – many families resorted to the cheapest foods to get by, but the cheapest foods are not always the most healthy; spend a little more at the grocery store to be healthy
Take these steps, and you will be well on your way to a new you in the New Year!