Now that “Black Friday” and “Cyber Monday” are behind us now with record numbers of transactions, (both days showed that consumers’ emotions run so wild that 1600 transactions a minute were recorded in the UK alone!!), i cannot help but wonder if many of us have not fallen victims of “Pent-Up Demand”.
You see, there is a general feeling that the worst of the current recession is over, even the bonuses which contributed to the problem (Credit Crunch) are beginning to surface again. This feeling of relief coupled that with the usual spending of the Christmas season may spell trouble again in the near-future – if care is not taken.
I am not trying to become a “Prophet of Doom” but there is need for all of us to be cautious. Even the “man on the street” knows that high debt levels were the major contributory factor in the credit-crunch induced recession and you don’t want to head that way again.
This brings to mind the financial term – Pent-Up Demand. What does it mean?
Pent-Up Demand is the scenario where the demand for a service or product is unusually strong. Pent up demand is used by economists to describe the general public’s strong return to consumerism following a period of decreased spending. It is often seen immediately following a recession or depression, where consumers have built their savings or held off on purchases due an the uncertain economic climate. Quite often, pent up demand accelerates the economic recovery period immediately following an economic downturn thanks to a sudden increase in consumer confidence and spending.
For some people, spending money at Christmas is something they have prepared for by setting extra cash aside but for the majority who may have forgotten that Christmas comes in December every year, my advise is: spend with caution – your financial freedom may depend on your actions during this season. I have gone through many christmases in which it took me many months to pay off the items i bought – as presents – at christmas. Now i just save for the period and generally cut my ‘coat according to my size’.
How do you prepare for the Christmas season? Please share.
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