Due to a lack of spending last month, caused by frozen wages and households tightening their purse strings, the economy took a bit of a hit. Britain’s retail sales dropped by 1.4%, compared to a 1.1% increase in April. It is felt that the rise in April was largely because of the Royal Wedding, our numerous bank holidays, and possibly due to some of the gorgeous weather that we had. It’s likely that it got to the end of the month, we all checked out bank balances and budget sheets, and decided that we need to reign it in a bit during the month of May.

If we aren’t spending money in shops, it means that the stores don’t make many sales, which in turn means they are not ordering products from factories and suppliers, and so on. It results in British businesses struggling and having to lay off staff, which in turn means they don’t spend much…….you get the picture! Circle of life, and all that!

So, what Ed Balls the Shadow Chancellor is recommending, is that VAT is cut, meaning that households feel they are able to spend a bit more, thus helping the economy as a whole.

Of course, it’s not quite as easy as that! By cutting VAT, it means less tax going to the Government on sales, and therefore making our country’s “overdraft” even bigger.

The Prime Minister is refusing to budge on VAT at the moment, but we will have to watch this space to see if others can help him change his mind.

The last time we had a VAT decrease was back in 2008 when it went down from 17.5% to 15%, and this was in hope that it would encourage us to spend our hard earned pennies, helping to get the economy back on track. Of course, as soon as the next government were elected, the VAT increasedagain.

For now folks, I wouldn’t hold my breath, I think the VAT is going to stay as it is, but there is a glimmer of hope for householders that it may drop. however, we also need to think about the country’s longer term monetary issues.

Answer these questions truthfully:

1.)    Does your spouse or partner complain that you spend too much money?

2.)    Are you surprised each month when your credit card bill arrives at how much more you charged than you thought you had?

3.)    Do you have more shoes and clothes in your closet than you could ever possibly wear?

4.)    Do you own every new gadget before it has time to collect dust on a retailer’s shelf?

5.)    Do you buy things you didn’t know you wanted until you saw them on display in a store?

If you answered “yes” to any two of the above questions, you are an impulse spender and indulge yourself in retail therapy.

This is not a good thing. It will prevent you from saving for the important things like a house, a new car, a vacation or retirement. You must set some financial goals and resist spending money on items that really don’t matter in the long run.

Impulse spending will not only put a strain on your finances but your relationships, as well. To overcome the problem, the first thing to do is learn to separate your needs from your wants.

Advertisers blitz us hawking their products at us 24/7. The trick is to give yourself a cooling-off period before you buy anything that you have not planned for.

When you go shopping, make a list and take only enough cash to pay for what you have planned to buy. Leave your credit cards at home.

If you see something you think you really need, give yourself two weeks to decide if it is really something you need or something you can easily do without. By following this simple solution, you will mend your financial fences and your relationships.

About the Author:
Kaitlyn Jones, a well experienced copywriter and has plenty of thoughts on internet marketing.