The funny thing about a recession is that it forces people to get real about their money — something that many avoid at all costs when times are good.
Overall consumer debt, which peaked at $12.5 trillion in 2008, was down to $11.4 trillion at the end of last year.
That means people are saving more. And they're more mindful of purchases.
But as the economy improves, there are signs that some may already be forgetting the lessons of the past few years.
The Commerce Department reported last month that consumer spending rose at a 2.7 percent rate in the first quarter. And the amount that we have on credit rose 3.8 percent to $2.42 trillion. That gain was the biggest since June 2008 and the fifth quarterly gain in a row.
It may be tempting to loosen your purse strings after years of vigilance, but experts say now is the time to fight that urge.
"We're burying our head in the financial sand," said Gail Cunningham, executive director of the National Foundation for Credit Counseling. "We think tomorrow will be better or our ship will come in. It's just too much to face. ... The building blocks of personal finance — people do not have their arms around them."
Learning about money and how to handle it is easier than ever before, with increased national scrutiny on lenders, tougher regulations and more free resources. In recent years, there has been a major push by federal and state governments, financial firms, nonprofits and schools to improve financial literacy.
Here's a collection of personal-finance tips from the National Foundation for Credit Counseling, the American Institute of CPAs in Durham, N.C., and other finance experts.
— Check your credit: It's a sad truth that many people don't know that they're entitled to a credit report from each of the three credit reporting bureaus each year. Check all three (or one every four months) to stay on top of what lenders see about you and your finances (http:www.annualcreditreport.com).
— What's your number? Pay the little bit extra to obtain your credit score. "It will come with some concrete steps that you can do to improve your score," Cunningham said. "Do what it says. Your score will be the determining factor of if the lender says yes and at what interest rate."
— Open bills: Knowing where you stand is half the battle.
— Get organized: Make sure you have a financial center — a place where you keep all of your bills and other financial papers. This doesn't have to be a home office or a fancy software program. It can be as simple as an accordion file. Just keep it all in one place and commit to visiting your financial center once a week.
— Balance your checkbook: Writing down your expenses and payments and subtracting from your total balance can be a powerful tool in keeping you from overdrawing your account. Your bank will give you a check register for free.
— Avoid fees: If you're the type that is unorganized or often travels, make sure that you don't miss a bill payment and get slapped with a late fee. Set up automatic bill payment online or pay bills the day you get them to avoid this scenario.
— Track your spending: The best way to know where your money is going is to track it. Try keeping track of every penny you spend for 30 days. Pay particular attention to small purchases and cash transactions, as those are the ones that tend to be unaccounted for in big-picture financial analyses.
— Create a realistic spending plan: Once you know where you spend your money, you can make educated changes. Remember to budget in some flexibility. Not too many people are willing to abide by a completely rigid budget.
— Elementary school: Ask your parents to help you open your own savings account. Keep track of how much money you put in and take out to see how close you are to meeting your savings goal. If you're saving for something special such as a new bike or toy, hang a picture of it on the wall. This will remind you of your savings goal every day.
— Middle school: Ask your parents if you can plan a family event such as a trip to the zoo or an afternoon at a water park. List all the things that cost money such as tickets, food and souvenirs. Set a budget, and encourage everyone to stick to it when the big day arrives. Make a list of things you want to buy. Put the list in order, starting with the things you want the most. This will help you figure out what you really want to save for.
— High school: Get a part-time job. Earning your own money can help you save for big goals such as college expenses. Talk to your parents about opening a checking account. Learning to use a debit card responsibly and to balance your checkbook is good money-management practice.
— Make it fun. Money Habitudes is a series of card games, developed by LifeWise of Wilmington, N.C., that are designed to teach adults and children about money. There are many other games that make teaching children less of a chore.
— Start talking. In many cases, people don't like to talk about money because no one talked to them about money. Make sure your children know it's a good thing to talk about finances and lead by example.
— Looking for ways to start? Ask your kids what the first thing they purchased on their own was or will be, depending on their age. Or ask them about some of their favorite TV shows and whether they portray a realistic view of money and what things cost.
— Remember, no one's perfect. Many parents shy away from talking about money with their children because they feel unconfident about their own money habits. But your children can learn just as much from your own efforts to get out of debt, improve your credit or make wise decisions as they can from their own. Explaining what you're doing and why can be a powerful lesson.
— For older children, Mint.com has developed a game with Scholastic that teaches how hard it can be to save. Play it at www.mint.com/education/.
— Look for free money. Contribute the maximum to your retirement account at work. Ask about flexible spending accounts or health savings accounts. All lower your taxable income and in some cases are truly free money.
— Have an insurance check up annually. Make sure home and auto coverage matches current needs. Ask for lower premiums, discounts for loyalty, good driving or multiple policies.
— Investigate refinancing your mortgage. Many online calculators can help you figure out whether it makes sense to refinance. Do not extend the loan term, however, to get a lower monthly payment.
— Have an estate plan. Estate plans aren't for the wealthy only. Everyone should have a plan in place to ensure those closest are protected in the event of a catastrophic event. Among items to consider: a will, medical power of attorney, and beneficiaries on retirement and other financial accounts.
— Create an emergency fund. Emergencies are going to happen. And while you can't anticipate them, you can prepare for them. The rule of thumb says to have savings to cover three to six months of living expenses in reserve. But don't be intimidated by that number. The important thing is to save something. Think of it like losing weight. Small change adds up.
SOURCES: National Foundation for Credit Counseling; Coastal Federal Credit Union; Lee Gimpel, director of marketing for Wilmington-based LifeWise; National Foundation for Credit Counseling and the American Institute of CPAs in Durham