Saving Vs Consumption
Posted by Gail | Filed under Saving
It’s time for a little history lesson. The objective of said lesson is to learn something. That’s the whole point of history. Only by learning from what went before do we stand a hope in hell of skipping the same mistakes a second time. Sadly, we’re bad at history and bad at learning lessons. But maybe, just maybe, this time hell is so hot our memories are singed and we will learn something.
Once upon a time, when we made $10, we saved $1. Some people saved $2. Some saved 50¢. But people knew that if they wanted to feel safe they had to have some money put aside just in case.
Let’s look back to the last century. In the 70s, the savings rate spiked to a high of about 15%. From the 80s to the mid-90s, the U.S. saving rate averaged 8%. In the mid-2000s, it averaged about 1%. In 2005, the savings ratio fell into negative territory, which was the first time the ratio went into negative territory for an entire year since 1932 and 1933 when the US was coping with the Great Depression.
Back in the mid-70s, Canadians saved 10% or more of their income. By the 80s, the savings rate jumped to about 18%, which is why Canadians got the reputation of being “savers” and so much “better” than their American cousins when it came to money. But from there it declined, rather rapidly. By the end of the 90s, Canadians’ savings were at zero or below.
There are all sorts of reasons for why the savings rate went into the crapper in North America. Varying unemployment was one. A sense that we were rich because our home equity was increasing was another. Easy access to credit was a third. All those reasons have their place in the argument, but none of them explains why just about everyone stopped saving. For that we have to look to consumption as the culprit. We got so good at consuming, and our economy became so dependant on consumption as a driving force, that we stopped believing that the act of saving was important and turned our full effort to spending. And boy, did we get good at spending.
To add insult to injury, we knew we were doing wrong and kept doing it anyway. To cope with our rampant consumerism, we came up with a “Buy Nothing Day.” And irony being what it is, it was on Buy Nothing Day that 34 year old Jdimytai Damour – 6 foot 5 and 270 pounds – was trampled to death by shoppers who broke down the doors of the Wal-Mart at the Green Acres Mall in Valley Stream, N.Y. Imagine being so desperate to go shopping that you’d actually trample a man to death.
To cope with our growing debt, we created debt clocks that spun at a wicked clip as they tried to demonstrate our stupidity. We looked and shook our heads, or we stopped looking at the clocks completely. Then, in October 2008, the National Debt Clock in New York ran out of digits. The “1″ was moved left to the space once occupied solely by the digital dollar sign and an improvised dollar sign was pasted next to the “1.” The guy who had the clock installed, Seymour Durst, couldn’t imagine a $10 trillion debt when he installed the clock in 1989. In a sign of the times, Adbusters’ James Stafford blogged about a ten-year-old girl in his? neighborhood who dressed up as a credit card for Halloween.
Rumour has it that the savings rate is on its way back up, people are committed to paying off their consumer debt, and frugality is the new black. I’m hoping we’ve come to our senses. We’ll see.
November 5, 2009 at 11:04 am
What an interesting post! I personally save a minimum 10% of everything I earn or receive. My pay is automatically split to save the 10%, but there are times I receive money for birthday, etc. and I quickly put it away. Sure I could go hog-wild but I know that the stress of money problems isn’t good for anyone’s health.
Now if only our government and companies would do the same thing, there won’t be a “bail out” system to save them except their own savings.
November 5, 2009 at 11:04 am
We look in the mirror and what do we see?
“Imagine being so desperate to go shopping that you’d actually trample a man to death.”
Enough said…
Well, I do have something else to add. As you’ve (Gail) pointed out during some of your shows, people look to shopping as a way to fill the void evident in their lives. Lack of love, lack of connection, looking for a way to feel good when the person is surrounded by emptiness. Could it be that as the Internet has become more dominant in our lives (something not around in the 70’s/80’s), that we lose connection with the people around us – that we fool ourselves believing our viritual friendships/relationships are as equal as real-life connections? So as we enmesh ourselves with our screens, we are losing our sense of community and what it means to be a social creature. As our cities get bigger, and people become more recluse, we have isolated ourselves from others, thereby creating feelings of loneliness and emptiness. We have forgotten that to add enrichment and joy to our lives, we need to bring enrichment and joy to others. Only then can we stop looking at consumerism to fulfill us.
[/end] soapbox rant
November 5, 2009 at 11:29 am
I do agree that the general population has drastically decreased their savings level, however I think the lack of saving goes beyond the desire to have things.
Inflation may be at historical lows, interest rates may be at historical lows, but for the most part the taxes that we pay here in Canada are high, the taxes we pay in some cities are high, what we pay for houses is high, transportation via vehicle and transit is high, daycare services are high, etc. Our cost of living is definitely much higher than what it was back in the 70’s and 80’s, etc. Sure, in the 80’s you had your double interest savings rate and double inflation rate, but at the end of the day was the cost of basic necessities as much as they are today? Did education for our children cost so much? Did we pay so much for gas? The answer is no.
There are those who abused the system and took advantage of credit, the rising value in their homes, booming stock portfolios, but for the most part our savings declined because it just became to expensive to live.
November 5, 2009 at 11:47 am
I think it is more expensive to live- but I also think we expect to live more expensively. Look at the houses being built today- when I was a kid we would have called these mansions- but they are standard now. ( and I’m not THAT old) Yes, many cars cost more- but many are pretty cheap as well- which ones do we choose? In my family, we save pretty well- but I know we could do better- but I still fall prey to the old impulse demon at times. Little things like Christmas ornaments, vitamin supplements add up pretty darn quick. I think we also have a tendency to accumulate stuff and to fritter money on things that weren’t around 30 years ago. Look at all the toys ( blackberry, computers, ipods, Wii, scrapbooking) that just weren’t there to spend money on. Even quilting used to be a way to use up worn out clothes and extra fabric- now its an industry .
November 5, 2009 at 12:06 pm
@Jenn…I totally agree!
I’m trying very hard to make saving a regular thing, even with my lack of steady employment.
I do think inflation is an issue. Last year I worked fulltime and had a decent salary. I rented and was paying my student loans of. I was not paying for my car though, so really for ‘case study sake’ lets replace my loan with a car lease (which is the Pontiac Wave, no luxury car here!). WIth a salary of 45,000 gross I had *just* enough money for rent(~800), loan(or car)(420), food(100 a week..this includes some entertainment money), expenses and some savings. I could not imagine having kids/supporting others on my salary. I had more than enough for a standard living, however there is/was no frills.
November 5, 2009 at 12:31 pm
Nice post, but scary too. The Walmart story is proof that people lose their minds when it comes to purchasing stuff and stuff at a discount. Whether crap is bought at the $store or somewhere high-end, people are constantly shopping. Some may think they’re not wasting much money by shopping at dollarstores, etc. but it’s still purchased crap at the end of the day.
I agree with Jason’s post on the over-priced everything now adays that is “fixed” as the standard price. Too many people give in to buying the luxury cars & homes that are now considered standard, and some have to pay for the daycare fees..and can’t boycott these extreme prices because they need to support their families. But no-one needs the over the top home or even a blackberry. Funny thing is no one forces these purchases on you and then the purchaser is shocked when the cash runs out?? Calm down and use common sense when acquiring things and trying to carve out a nice living.
November 5, 2009 at 12:32 pm
Yes, things are more expensive, however our wages are much higher.
My father retired making less than I make and I am 10yrs away from retirement. He and my mother raised three daughters on one income and saved for a comfortable retirement.
The main difference (as I see it) is not the higher cost of living but rather the higher expectations and and increasing availability of “must haves” and ways to obtain them.
Everyone believes they can live an In Style life, regardless of their income. Our parents were abundantly aware of the finiteness of their paycheques, and lived their lives with the awareness that money runs out and nobody will pay your way.
There is no longer shame in debt, only shame in admitting you can’t afford something.
The relentless pursuit of “bigger, better, shinier” goes hand in hand with our need the have the smartest, quickest, most talented children who are in the most activities, somehow trying to convey the idea that this makes us better parents.
High school peer pressure has run amok and taken over our supposedly adult minds as we try to prove something to anyone who will listen.
I love beautiful objects/furniture/clothing as much as anyone, however I am not prepared for sleepless nights worrying about bills.
November 5, 2009 at 12:33 pm
I also agree with Jenn. So many young adults of my generation expect to move out of their parents’ house at 18 and into a fully furnished “mansion” of their own, complete with pool and annual vacation. For some reason they lack the knowledge that you earn these things little by little over a longer period of time.
When I was in college my dining room table/homework desk was an overturned monitor box from my 7 year old computer and my chair was an overturned milk crate. This went on until my dad visited months later, had pity on me and gave me two old wooden lawn chairs he wasn’t using. I still used the box as a table. I did not have cable or internet and many people in my class thought I was weird because “you NEED cable”. I graduated top of my class and saved enough from my summer job to buy a table my second year.
There is also this article I read on Yahoo Finance, “We all know that we make far more in dollar terms than our parents did 25 years ago. But most people don’t realize that nearly all of the increase is inflation. If you strip away the impact of rising prices, the years between 1980 and 2005 the median annual salary for a full-time worker rose all of $53 — that’s right, $53 a year — to $41,401, according to Statistics Canada. the cost of a family night out once a year at Swiss Chalet.”
November 5, 2009 at 12:37 pm
I totally agree with you on this one ladies.
My parents are always telling me how your money just doesn’t go as far as it used to. How even though salaries have increased it doesn’t come close to how much living expenses have increased.
When my mom and dad bought their first house they were 25 so that would of been 27 years ago. Their income was $50,000 a year (as mom stayed home) and the house they bought was a 3 bedroom bungalow for $90,000. My brother and his wife just bought there first house (duplex) for $260,000 (very low for here in edmonton) and they make $87,000 together. So my parents house was only 1.8 times their yearly income whereas people today getting into their first house the lowest they can get into is 3 times their yearly income. This example can be used on many different things like transportation, cost of food, etc.
I also feel that SOME people feel they are entitled to more. They want the biggest, the best, the newest, etc. Some friends of mine just bought their first home for $370,000 and they are only 22 and 26! Wow, I couldn’t believe it when they told me! And they were proud of themselves because it was still $40,000 lower than what they qualified for. Plus they both lease brand new vehicles every 4 years and now one of them is thinking of trading in his truck for a sports car. Granted they have good jobs, they are both cops.
When we bought our first house we got it for $120,000 lower than the bank qualified us for because after I worked the numbers I realized that it would be hard to doing any saving or investing if we got at house for what they qualified us for. It was very hard for us to find a house that was in decent shape for what we wanted to pay here in Edmonton. We had to move to a small town 10 minutes from Edmonton just to get into something we were comfortable with and we are still not able to save as much as we like as something always comes up.
November 5, 2009 at 1:00 pm
Megan, the story about your cop friends does not suprise me. I used to work at a bank and I can tell you that police officers had some of the most messed up finances I had ever seen. A lot of it had to do with the high rate of divorce among cops and the resulting juggling of second and third marraiges (child support and alimony).
November 5, 2009 at 1:11 pm
Our house is small but just the right size for our family. Not only do we not need more space, but we don’t want more space – more expenses for cleaning, maintenance, heat, hydro, taxes, etc, let alone the environmental footprint. I agree with so many of the comments above about buying what you can afford, not what you are approved for! We also have friends that have bought huge monster homes. They live with brand new furniture (which they will have to pay for in a year!), huge credit card debt (because they want everything right away) and are starting to get huge heath problems (thanks to all the stress of living beyond their means!) In our small and sensible house we can save and live well and sleep well. Check out Sarah Susanka’s books: http://www.notsobighouse.com/
November 5, 2009 at 1:31 pm
I agree with a lot of what has already been said — salaries have not increased enough in real dollars since the 1970s to keep up with our society’s greatly inflated ideas of what we “need” or “deserve.” How many TV channels did we need in the 70s? In the last few episodes of TDDUP, I’ve seen people who traded in their cars every year, snowballing the debt every time — how many people did that in the 70s? How many university students had credit cards then? How many of us who read this blog regularly had as many pairs of shoes in our closets as we have today? A lot of things we take for granted now were not even options when I was a university student in the 80s. Even then, people who had a lot of “stuff” typically had OLD stuff they’d saved, not lots of new stuff they “collected” or bought “because it was on sale, such a good deal,” etc. I think it’s a major shift in our worldview that’s going on here. It’s made up of the actions of individuals, but of so many individuals (past the tipping point, as Malcolm Gladwell would say) that it’s the will of the collective. It will take change in the everyday choices of many, many individuals to tip back!
November 5, 2009 at 1:35 pm
I really hope that the increased savings rate is not just a temporary reaction to economic hard times, and that it represents real change. It’s so sorely needed.
November 5, 2009 at 1:44 pm
We have 3 children, 2 boys 23 and 20 and a daughter who is 9. What hit me over the head was when the boys grew out of their toys at various stages and I was giving them away or selling them. A quick addition in your head of the value to purchase this stuff will send your head spinning. And we often had doubles of things because they played with them together. Now they have grown into bigger more expensive toys. We always resisted buying the next best thing. Our boys had a nintendo only after the nintendo 64 came out. They were always a bit behind the newest craze (until they got their own money and ponied up for what they wanted). We have many DVD’s that are no longer watched. I understand keeping some favourites but for a whiile when family didn’t know what to buy them, they just got the latest DVD.
With our daughter we are trying to be aware of this and found many of her big toys at yard sales in perfect condition. She didn’t know the difference. While I feel we have somewhat learned our lesson we still give in to temptation and buy way more than what they (or we) need.
Unfortunately for us our daughter is a fashionista who loves clothes, shoes and purses and jewellery so she could get very expensive LOL
Actually she is very aware of how much her room can hold and detests clutter so even at 9 when something comes into her room she gives up something else. Now we discuss if she really wants the item she is considering enough to give something else up. If only I could be disciplined enough to use that in the rest of my house.
November 5, 2009 at 1:51 pm
I agree with much that has already been said regarding on how values regarding possessions have changed over the years. I remember when I was around 20 or 22 (early 90’s) speaking with my grandfather about getting married eventually and wanting to stay home with my kids. I figured that I would never be able to do that. He told me that yes, I could. He was adamant that there was no need for both parents to work, that one could stay home. He said the reason people though they ‘needed’ 2 incomes was because they had to buy the big homes, have 2 cars, 4 tv’s, 4 vcr’s, cable to every televison, children in 3 or 4 activities at a time, in order to have a full and happy life. He and Grandma lived modestly, worked hard and retired comfortably, while still actually leaving a modest inheritance to their kids and grandkids. Grandma rarely, if ever, worked outside the home. His words have stayed with me over the years.
November 5, 2009 at 2:02 pm
If you are interested in how these issues have affected the middle class in America, I strongly suggest you watch Elizabeth Warren’s lecture that you can find on youtube here http://www.youtube.com/watch?v=akVL7QY0S8A
It’s an hour long, but very, very interesting. I became interested in Warren’s work after I saw her in the documentary “Maxed Out” a few years ago, which you can also find on youtube.
November 5, 2009 at 2:29 pm
Amen to all of the above….People need to realize that happiness isn’t purchased at a store. When I was a child (way back in the 60’s) I had a toy box…my children(in the 80’s) had a walk in closet full of toys…my granddaughter has a toy room! I never felt deprived as a child and don’t remember wanting much…now kids have huge want lists and never seem satisfied. It’s not the kids faults, we need to look at how we are teaching our kids about what is important, and teach them to have self esteem based on who they are not what they have.
November 5, 2009 at 2:45 pm
I agree with Jenn. There are so many “wants” today that are considered to be “needs” by most people. The amount of money that people spend on cell phone/blackberry bills each month just blows my mind. (Congrats to those of you who have not surrendered to the need for a cell phone – I gave in, against my will
There is a new fitness club that just opened up in my neighbourhood and I’ve heard that the monthly membership fee is over $70!
When it comes right down to it, each person must decide where their money is going, and this should be in line with their own values. Someone might choose to buy an expensive gym membership for any number of good reasons – it makes them feel good, it is an investment in their personal health and fitness, it provides good social networking opportunities, etc. I just think it’s important to remember that it is not a need, it is a want – and we make choices to indulge these wants.
November 5, 2009 at 3:07 pm
I think part of the trouble is that since the depression the generations that went through it and followed wanted to give more to their children than they had. Looking back at that history, it produced some pretty awesome ancestors with their heads on their shoulders. It sort of blossomed from there through the years until it now has imploded on itself. Seems there is a sense of entitlement around us. That is not productive for anyone.
I have always remembered my Dad telling me ‘you have to creep before you can walk’, but, unfortunately, even his wisdom didn’t stop me from being stupid sometimes. We live and learn.
I do so hope that the pendulum is swinging back towards saving. Hubby and I always marvel at the size of the homes being built. Now he pipes up and says ‘I wonder what Gail would say about THAT one?”
November 5, 2009 at 3:59 pm
Prices will go up if we are willing to pay.
You need a small % for a down-payment for a house, so people do not feel as much importance in saving. Is there a possible relationship between % down required and % savings?
Of they lose their job, there’s EI (without realizing that there is a paycut with EI, sometimes big) and then social benefits.
Diana wrote: “There is no longer shame in debt, only shame in admitting you can’t afford something.” I would correct that to: There is not longer shame in debt, only shame in not ‘thoiling’.
It is possible that one side-effect of having kids later in life is that people get a few more years with higher disposable income. It is hard to give up those little pleasures once kids need new clothes.
November 5, 2009 at 4:21 pm
Good point about the additional years with higher dispoable income, Marie! I think you may be onto something there…
November 5, 2009 at 5:27 pm
I think our costs have gone up a lot – my parents told me that the percentage of housing costs was a lot lower portion of their income than it is for me and my brother. Plus, they had company pensions and a good chance of actually receiving their social security payments, neither of which is true for me, so I have to save a lot more to cover my retirement savings as well as other savings. This of course does not excuse all the “lifestyle inflation” but it does explain a part of the lower savings rate.
November 5, 2009 at 5:30 pm
I admit that a few years ago I was a horrible saver. I always WANTED to save, but I never did it. I don’t know why. I have no excuses. I just didn’t. Now my husband and I save at least $100 a month (going into our emergency fund). We are waiting until January when his company will match 50% to start saving for our RRSPs. I know you are supposed to save at least 10% of your income, but we are struggling financially right now. I’m happy we at least save SOMEthing. We have no debts, except our cars.
November 5, 2009 at 6:26 pm
@ Cassie – don’t beat yourself up too badly. No debts is pretty good (though you do have debt if it’s for a car, but at least you have an asset). Don’t go into debt trying to save 10%. I’ve known people who carry a balance on their credit card while trying to pay down their mortgage early. Gail is the first person to say that balance is key I think, which is one of the many reasons why I think she’s awesome. Watch yourself, save what you can, and most importantly think before you act and act rationally.
November 5, 2009 at 7:40 pm
For the first 10 years of my adult life, I saved about 3-4%. The second 10 years of my adult life were the years we spent having our 3 children. Savings dropped to maybe 1-2%. Now, we’re in our early 40’s and finally buckling down, paying off our small LOC over the next 6-8 months and really focusing on our savings. We are currently saving about 6% to our pension plans, and an additional 14% into RRSP, RESP, house maintenance, and emergency funds. We pay 5% towards our LOC and the rest covers our fixed and variable expenses almost to the penny. Surprisingly, this is not that hard – yes we are tight, and there isn’t much left for saving towards new purchases, spontaneous entertainment or vacations, but it’s all good and we are able to manage expenses we forgot to factor into the budget when we first made it. But the two main points are – SAVE for the future and PAY the debt.
November 5, 2009 at 8:10 pm
Part of the saving problem is that most of us were sold the ieda that available credit (for emergencies or big purchases) was the same as savings!!! I know SO MANY poeple that still believe that. “If I get into trouble, I can always put it on my LOC untill I get back on my feet, why have my money tied up in piddly returns?”
I have been reading (and watching) Gail long enough to know that’s just asking for trouble!
Re: Kim’s comment about the toys…. so true! My toys all fit on the floor of my SMALL closet as a kid, and a prized teddy bear on the bed. My 8 year old has over a dozen webkinz and other teddy bears besides, and his room is JAM packed with toys! My sister has taken this a step further and has a toy room that is over 450 sq feet! Complete with Wii system and widescreen TV. (and a big trampoline outside) It’s insanity! My mom is a major contributor to this, she is guilty of wanting her grandkids to have anything their heart’s desire…. a lovely sentiment with very cluttered results. The kids suffer from overload on Christmas, it’s kind of sad.
November 5, 2009 at 8:37 pm
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November 5, 2009 at 9:17 pm
It isn’t an accident that smaller houses are gaining in popularity right now. I regularly put 12% away in my 401K and my employer adds 4%. Then I also save about 20% for short, mid and long term savings. I don’t even pinch pennies to do this. I bought a house last year and I still go on decent vacations (cash). In order to do this I have made decisions such as “I don’t need a house full of new furniture”. Any project I do on my home is saved for to allow me to pay cash (the key to this is to have an addition 10% for unexpected costs).
I was a kid in the 80s and the only tv I had was a black and white my parents got with the old S&H green stamps. I had a toychest (and that was it) for my toys. If I wanted something fancy I had to save for it. We did have the latest electronics in my house (my dad’s favorite toys are nintendo and computer). We did have a “play room” it was called the front yard. I saved money to go to camp and fundraised for band trips. When college came around I worked in the summer full time and part time during the school year plus some financial aid to pay for it. I did have a credit card in college and when I graduated the balance was $0. The only debt I have beside the house is student loan debt. It isn’t that my parents couldn’t have afforded these thing. It was about teaching my sister and I the value of money.
All of my friends around my age have the same point of view regaurding spending and saving. You can’t have it unless you can pay for it. This isn’t just a generational issue. People of every age were spening beyond thier means and are now struggling.
November 5, 2009 at 10:26 pm
Stats show that since 1980 wages have been stagnant. What’s keeping middle class families is the vast number of women who entered the labour market. Not saving and too much consumption is only a piece of the problem.
November 6, 2009 at 3:04 am
I too cannot believe how many expensive toys kids have. I had a toybox that contained lego, some farm animals, and a couple of Barbie Dolls and cutout dolls. Much of the time I played with the cutouts or as I got older, I had a my nose in a book. I didn’t feel deprived and I had a vivid imagination that got a lot of use. Who decided that kids have to have all these expensive toys?
Advertising (esp. television) has a huge impact on our society. Over time it has convinced many that wants are needs and that what we need is the latest, biggest, and generally the most costly. I also agree with *Pol’s statement “Part of the saving problem is that most of us were sold the idea that available credit (for emergencies or big purchases) was the same as savings!!!”
I don’t think my parents owned a brand new washer/dryer until they were in their late 70’s. My Dad was a handyman and could always make a second hand appliance last for years. But even many appliances/electronics are now are made so that it is too costly if not just impossible to repair. We are a society consumed by consumerism.
November 6, 2009 at 3:11 am
I’m glad to see Gail mention Adbusters here. I know the magazine has evolved over the years but back when I first started reading it in university (late 80s/early 90s) it was mostly a counter-consumer mag and Buy Nothing Day was strongly promoted in its pages as well as TV Turnoff Week.
Never hurts to be reminded that a Buy Nothing Day (even a self imposed one) or a TV Turnoff Week, can do wonders to replace the mind-numbing clutter with awakening silence.
Battle it people! What do you need? “Need” is the word, not “want”.
November 6, 2009 at 3:17 am
I strongly encourage people to pick up a book by Seth Godin called Unleashing the Ideavirus. Heck, he’s gone and done something unorthodox and posted it for free on his website here:
http://www.sethgodin.com/ideavirus/downloads/IdeavirusReadandShare.pdf
While his analogies to “current technology” are circa 2000, the information is still extremely relevant. He talks about how the marketing of yesterday (random and frequent bombardment via tv ads, or mass mailings) is being replaced with more clever marketing schemes. While it is useful information for anyone marketing a product or service using more forward-thinking methods, it is also an interesting read if you want to get your head around what new methods marketers are using to extract $$ from your pocket.
A fascinating read.
November 6, 2009 at 3:19 am
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November 6, 2009 at 3:47 am
Watch babies and toddlers play – they don’t care if something cost big bucks or you give them a wooden spoon and a pot, or the empty box their newest toy comes in. As kids, our ‘toys’ were the great outdoors, and anything we could find in it. There were 15 of us cousins, and once a week the three families got together and we played outside. No video games, or even TV. We rode horses, built forts, went sledding/skiing, or swimming in the dugout. Sometimes, even work (on the farm) was fun. Granted, nowadays, it isn’t always safe to have our children too far out of sight with the greater risks kids are exposed to. Buying them the biggest/best/newest is not a great way to compensate for what we didn’t ‘have’. Seriously, how many of us feel deprived in our childhood? I sure don’t, and my parents didn’t even have running water in the farm house until I left home! A co-worker was complaining about his power bill, and when he told me how much, I asked ‘why so high?” He told me that ALL four of his kids had their own TV in their room, as well as some type of electronic game system!! I asked him when the family ever saw each other, and he just shrugged, like it didn’t really matter! If we stopped indulging our children, then maybe they wouldn’t expect so much, and wouldn’t think it beneath them to take an entry level job in order to learn a work ethic. While we are fixing our own generation’s lack of saving habits, and the bad cases of the ‘gimmies’, we need to instill the concept that debt, and living beyond our means is bad, bad, bad. Otherwise, when we are in the senior homes that we can’t afford, our spendthrift offspring will be running the world – Yikes!
November 6, 2009 at 4:01 am
One more thing, on the topic of saving. My new part time job is processing damage claims at Superstore. Now, if a product is out on the floor, I am able to buy it (after work hours of course) just like any other customer. The first few days, I did buy several products that I normally wouldn’t, even at 50% off, just because they were on ’sale’. My sister has spent herself right into a hole buying for her grandchildren, and is always showing me her latest purchases, because “it was only $XXX,” She doesn’t realize that her kids can provide for their kids much better than she can, and just keeps filling her closets with stuff. Thankfully, I gave myself a stern talking to, and have resolved to not buy anything that is not on my list, regardless of it’s marked down price. It also boggles me how many of my co-workers will pay $4 for a sandwich which would cost them 50 cents to make at home. The new me is committed to building an Emergency fund, and saving for a newer vehicle. Just like my Grandma did, a little at a time. (she saved her quarters until she could buy our family a bicycle with cash!)
November 6, 2009 at 4:11 pm
When my eldest was very young, she became an expert at looking cute when she wanted me to buy her something, as all kids do. A couple of times, storekeepers actually gave her things. One day someone said to me, “How can you say, no?” My response, “It’s easy. I love her.”
Just because I can afford to give my kids everything they want, doesn’t mean I should. This is not a show or love or good parenting. As easy as it would be to buy the $10.00 toy – and not listen to the arguments and whining and fussing – the long term consequences are so much greater.
November 6, 2009 at 4:58 pm
It’s hard to teach your ‘child’ to save right now with interest rates held artificially low so that people will go out and spend money. They can’t see the value as they get next to nothing or nothing in interest. Even buying a Canada Savings bond that they are advertising so heavily has such a low interest rate it doesn’t make sense to a child…. I struggle with this one.
The other day I left a statement out on the table where young Mr. spendthrift (he has a part time job) saw it. He commented that we had ‘lots’ of money. So I pointed out that there were categories: new car fund, yearly insurance fees, emergency fund, vacation fund and that there wasn’t enough in any of them to be considered complete. They were works in progress. Hopefully a little light turned on.
I have a ledger worked out for him that he has to use. He is to put 10% in school, 10% tithe (his choice as to where it goes as long as a charity), long term 10%, short term and his car fund he gets to fiddle with. This after he got himself out of debt. How could a 16 year old be in debt? The bike mom and dad were going to buy him wasn’t good enough nor the snowboard. He had to pay us back. He kept getting mad that I wouldn’t allow him to just pay us his whole cheque and get it paid off. However, many many times I explained that that’s not how life works. If he did that then he’d not be saving for school (he needs to be invested in the experience to not waste it!), he wouldn’t be tithing, he’d expect us to pay for all his clothes and toiletries (not the cheap stuff we’d want to buy) so he wouldn’t really be paying us off. After 2 years I’m hoping he’ll start to get it.
Savings are starting to grow. He now has $1,411 to his name. This after my husband didn’t allow me to teach him when he was younger as I did his older brother. Then complained that our son was a spend thrift and didn’t know the value of a dollar.
I must say I found it much easier (motivationally speaking) to save in the 90s when interest rates were really high so you wanted to save money. Canada savings bonds at 10%! those were the days. LOL
November 6, 2009 at 6:07 pm
All very thought provoking and valuable points. I also feel that compared to the older generation(s), a lot more people have life/disability/death insurance. Most families have at least 2 vehicles, vacation every year, some even twice a year. We are also heavily invested in our children’s after school activities, parents with children going for dance or hockey will know how expensive these are. Can we live without it? may be…. but we want the best for our children.. so all these add up to eat away from the ’savings’.
November 7, 2009 at 11:56 am
I agree with a majority of the posters. Round and round we go on the merry go round of life of needs vs. wants. Unfortunately, the very attitude of ‘I want the best for my kids” usually means ‘throwing money’ at them. I am a child of the 70s and would add that my parents wanted the best for all 4 of their kids as well just like ALL parents, and my mom worked outside of the home, but in that day, our playroom was the great outdoors, playing with barbies, hide and seek, dodgeball, running around, tobogganing (all free acitivities). We didn’t have play dates, rarely went out to the movies with friends or had fancy birthday parties – and we turned out just fine! I wouldn’t trade my childhood for these times. We never had a Christmas list – to this day I struggle to think of what I would like for my birthday or Christmas . . . I just never grew up that way. It is a generation of entitlement that we are creating. My nephews don’t do chores unless they get a financial pay-off!
December 23, 2009 at 1:10 am
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February 6, 2010 at 1:18 pm
I agree that frugality is the new black- especially since the recession came about. Everyone has heightened awareness of their finances. I see money columns in the newspaper all the time about ‘how to save’ etc. I am glad to see that the savings rate of us North Americans have come back up!