Inflation Sucks!
Posted by Gail | Filed under Balance
New Poll. Go Vote.
I bet you thought this was going to be one of those economics 101 blogs about inflation and it’s impact on your money. Fooled ya. The type of inflation I’m taling about today is Lifestyle Inflation.
Back when my parents were paying their bills, they had to cover:
- a mortgage
- home insurance
- car payment
- car insurance
- utilities
- our home phone
- my ballet lessons
I have to pay all those bills and a few more that hadn’t been invented yet:
- cable television
- internet service
- cell phones
I don’t have a TiVo (nobody can understand that!) or a NetFlix membership, a satellite radio, a gym membership or an Onstar account, none of which existed when my parents were raising us.
Now people buy bottled water (my parents turned on a tap), and daily coffee (my parents made this at home), and have answering machines or voice mail (my parents’ phone just rang and rang and rang.) Nobody they knew would spend the equivalent of $200 on a pair of running shoes or jeans. And when my mom threw a birthday party for me, only a couple of friends but a lot of family showed up to my house (no party-room), and my mom did all the cooking (no ordering a pizza) and baking (or professionally made cake). Dogs didn’t get to wear clothes, cats ate scraps of the family’s table, and travel was something you did only very rarely.
Lots of our modern “necessities” add value to our lives, but they come with costs. Some people work really hard to make sure they can afford these new “needs.” Some just put it all on credit and hope for the best. All that “more work” means more expenses: an extra car, more professional clothes, childcare expenses, higher commuting costs.
Yup, lifestyle inflation is not only expensive, it’s complicated.
So how do we decide what’s a new “need” and what’s a “want” dressing up like a need? When you watch those Onstar commercials about the car crash, does it make it feel like that service is a safety issue and, therefore, a need. Ditto the movement to organic food. Or the decision to buy a van over a smart car. Are we so spoiled by the things we now take for granted that moving back to a simpler, less expensive and less complicated lifestyle would feel like deprivation?
How big does you home really have to be to be good enough? According to the National Association of Home Builders, our homes grew from just over 1400 sq. ft. in the 70’s to over 2,330 sq. ft. in 2004.
How new does your car have to be? And how many pairs of jeans does your son or daughter need? How many TVs, DVDs, or roomsful of furniture are enough?
Now that we know we should be saving more, and we’re a little worried about inflation (the economic kind), is it time to look at the impact lifestyle inflation has had on how we’re spending our money to decide what’s really important?
I have some nice things and I’m very happy with what I’ve got. I don’t have a driving desire to improve my lot by buying more stuff or the latest new toy. (I don’t have a Blue-ray machine and I’m not even thinking about a 3D TV). I’m happy to drive my current vehicle until it croaks, and my expenses are pretty much under control. There have been times in my life when I’ve spent a lot of money on stuff but not so much now.
So, how has lifestyle inflation eaten into your budget and what are you doing to combat it? What “need” do you have that never even existed when you were growing up? And what do you think you’ve had to give up to have the stuff that’s become so important to so many people?
June 14, 2010 at 7:39 am
I was motivated to cut out the extras while trying to get rid of some debt two years ago, which I was able to do EASILY with the excess. My phone line, internet and sattellite TV is “minimal” although 2 or 3 didn’t exist 20 years ago. A recent call to the company’s loyalty department slashed my already low bill by 25%!
I bought a reliable used car, and paid it off. Now, there is NOTHING like the freedom of driving a paid-off car:) !! It may not be the most stylish thing on the block, but it isn’t a cement block around my bi-weekly paycheque either! Your 15% transportation expense category shocks many North Americans, since it is so easy to go way over on this expense without saving up a dime. And then, you people pay for this mistake every month once they’re locked in…
Going vegan saved me an additional $75 per week on groceries and it was like giving myself a $350 per month raise! Even without this extreme, cooking most regular meals at home can make a huge dent in the budget. Since I’m a great cook, I’m starting to teach cooking classes on Saturday to people in their homes to stoke up my retirement fund.
What I did with all those savings was really ramp up my SAVINGS this year. I’m putting 25% of my net away for a rainy retirement day, and it feels great!
Thanks Gail,
Karen
June 14, 2010 at 7:41 am
Yes, lifestyle inflation has affected us. We have a cellphone and internet and all sorts of stuff my parents didn’t have when they grew up. I need the internet, both for work and play. Of course I grew up with the internet too. Right from it’s infancy I was allowed on, although when I was young and using a BBS it was supervised. I still remember the ohhhs and awwws when a faster modem came home.
I of course haven’t had the lifestyle inflation that some have had. I don’t own a flat screen or a blue ray player.
Personally I’ve just had to grow up to be able to afford the extras we have. What I mean is no taking a job where the boss has to watch me. I have had to become responsible and look after my work and get it done. this allows me to pull in a bigger pay cheque.
regards,
Jason
June 14, 2010 at 7:48 am
Lifestyle inflation … we have cable, but basic cable (my parents have more channels than we do!)
Internet has become a “need” – it is predominantly how I stay in contact with friends.
Telephone & VM – we have the basic machine on the desk that I was given when I moved into res 7 years ago. It still works, and I don’t want to pay an extra $3 for voicemail, nor do we pay extra for call display.
Vacations to far-off locations – this isn’t really a need, it’s a want. We try to stick with vacations that are under $600 a person, and then bring some extra money for tips and excursions. We don’t bother buying ourselves souvenirs or things, unless it’s a postcard / something we forgot to bring – like soap! We could just stay home, take the week off work and explore other parts of Ontario … but I do so love waking up and walking to the warm beaches and spending the day in the water! Our family vacations were baseball tournaments most summer weekends … oh how we wanted to go to Florida!
Food – we don’t go out to eat all that frequently. Fast food is maybe once or twice a month, and a sit down restuarant is once a month, unless we’re invited out with friends (though that would add on an extra 1, maybe 2, dinners out). Groceries we splurge, and that has been experiencing lifestyle creep since I got my student loan paid off. My plan had been to take the money that had been going to my loan, and use that towards saving for a house, but I’m finding it more difficult as our groceries are up to an average of $350 a month, from $290 last year. I’m not sure if everyone else’s experience is the same (with food budgets going up as debt disappears), but that is something we do need to work on.
Stuff – we have big furniture, but not a whole lot of “stuff”. We do WANT a bigger bed though. A double would be greatly improved upon if we had a king size bed instead (though I don’t want to have to replace our sheets, summer bedding and winter bedding!) – when we’re disagreeing over who is taking up too much space on the bed, that’s when we go from want to need!
Looking at what we have now versus what I had growing up (granted, I am only 25), the only difference is we each have a computer. I bought my first computer in grade 7 (having seen it was a requirement for my brother’s work in high school), used it to write stories, do homework, learn FreeCell, and play Theme Park. Now, I use it predominantly to go online, store memories, keep recipes, and track expenses. Our Internet IS better though.
June 14, 2010 at 8:02 am
Yes, lifestyle inflation has affected our household too.
There’s cell phones for the kids (I only pay for the youngest, the 22 year old is on her own); high speed internet because anything slower means we can’t function; higher than basic-cable TV. When I was a kid growing up in Oakville, ON, we got two channels. Was there such a thing as cable? If so, we didn’t have it, nor did any of my friends. Oh, also computers. If you have internet, you have another appliance to keep up-to-date (hardware or software).
I have a PVR, but I bought it used on Craigslist. Sure, it’s still on the old daylight saving schedule, which means the clock is off for a week or two a year, but we can cope. It’s not perfect, but it saves us a lot of money in movie rentals.
My mother didn’t spend any money on gardening or landscaping when I was growing up, because we were renters. I could spend quite a bit in this area, but have to restrain myself.
My mother worked at places like the grocery store, and Canadian Tire and a burger joint. She was given a uniform to wear. She didn’t have fancy anything. The girls and I can easily be swayed by something swanky – but we don’t purchase this stuff too often.
Two huge things I have that my mother did not: a mortgage and medical expenses. Also a single-mother, my mom never owned her own home until she remarried. I don’t recall her paying for any of my medical expenses as a kid either, and I have one daughter (Type 1 Diabetic) who’s medical expenses aren’t covered.
What have I given up? I’ve made a choice to live without a car. I spend money on public transit and sometimes rental cars, but this is still far more economical than it would be for me to put a car on the road in Toronto.
I don’t live in a big house – the small one I have in Toronto is expensive enough!
The kids aren’t involved in extra sports or lessons.
We don’t buy bottled water. I’ve spent under $5 on take-out coffee so far this calendar year. We shop a lot at thrift stores, although not exclusively. We have an older, hand-me down TV that will likely outlive some of the new flat screens. No blue-ray here either.
When I moved out of the suburbs to Toronto, I noticed a lot less of the “keeping up with the Jones’” kind of thing. Perhaps the price of admission into the real estate market into an average neighborhood in Toronto is high enough, it reduces the degree of consumer excess I’ve seen elsewhere?
June 14, 2010 at 8:11 am
In an age where there is so much vying for you time and money, it is more important than ever to prioritize and understand what really matter so you can spend in the direction that makes sense financially and personally.
For us it has meant not paying for cable but we have a projector for movies that come from the library. Not paying for a cell phone plan and going with pay as you go only for emergencies. Not spending more than a couple of meals out a month so we can go on vacation overseas. Cooking more, driving old cars, not engaging in the fashion of the month means we can own more than one property.
June 14, 2010 at 8:36 am
About two years ago, we decided to get rid of the satellite TV – we live in the country and cable is not an option. We get three channels with rabbit ears – and we get movies from the library (free). Occasionally, our daughters (6 and 9) rent movies but that’s it. Do we miss it? No. We do have high speed internet though, and we watch shows we want to see on it – okay, so they may be behind a bit, but who cares? Our house is about 1,100 sq. ft, and it’s plenty for us. We are saving up for a Disney trip (saving for two years now), and are going this fall. Usually, our trips are within Ontario, and we are camping, or checking out hotel sales and doing that once in awhile. As a stay at home mom, I cook our meals, and we always eat together (unless my husband is at work on shift work). We enjoy our life – and want our girls to grow up understanding that you don’t need to have the newest stuff to live. So far, I think we are doing that!
June 14, 2010 at 8:57 am
My parents didn’t even have car payments. If you wanted or needed a car, you saved up for it. And a second car didn’t come along until my older brother was 16.
Other than renting a cottage for two weeks for a few summers, the only family vacation we went on was the cross-Canada train to stay with a friend in Victoria BC, and back then it was only possible because my brother and I travelled free as we were only 4 and7.
There are so many extra costs in life these days (cell phones, internet, etc) and the fact that the needs and wants of children are so pricey these days, I don’t know how some folks do it. Personally I can’s wait for the day when I can ditch our cell phones. We need them for work right now.
This blog puts me in mind of a ‘rant’ I read the other day. It goes on to state the differences between the generations. You know… how our parents used to tell us how life was when they were kids.
These days we’re telling our kids how when we were kids… if you wanted to place or receive a call, you had to use the phone at home… how if you wanted to play a game you went to the toy cupboard and got out the board games… how you had to compromise as there was only one tv in the house… how the front porch or the sidewalk in front of the house was our social networking site… how you had to find your own entertainment as there was no satelitte tv or video games at the cottage… and so on, and so on. 
June 14, 2010 at 9:17 am
The inflationary extras are definitely alluring but they add up exponentially. We have no Tivo, satellite radio or NetFlix. The onstar that came with my new vehicle free for a year I just cancelled. Boy was that hard to do…not on my part, but the lack of understanding on the CS agent on the OnStar end. It took 15 minutes before she’d let go.
We have a house that is less than 900 sq feet. We’ve never been to Disneyland/world (though I really do want to go to DW).
My kids see that pretty much everyone else in our circle has more/travels more and it’s hard when they ask why.
June 14, 2010 at 9:21 am
There was an ad for something on the tv the other day that was using the vertical coloured lines / blocks, and it reminded me of the days when there were 2 channels, they played O Canada at midnight or so and then went off air until the morning. My 46 years isn’t ancient (in my books!), so not really all that long ago. But I hadn’t thought about those days for years and years either! Now there are hundreds of channels, 24/7. No downsizing the tv selection for now, though. My 85 year old mother-in-law lives with us, and tv is part of the mix (with books, and puzzles, and even internet games).
June 14, 2010 at 9:27 am
I think lifestyle inflation exists, but it definately depends upon your history. In my family, 2 out of 4 children have lifestyle deflation (living less), and 2 out of children have lifestyle inflation (living large).
My parents were spenders, and two of their kids are spenders. I think the jury is still out on me though. While there hasn’t been inflation (my parents ended up broke and living in the basement of my siblings), I am at times a saver, and at times a spender.
Saver: I don’t drive because I live in Toronto, and the expense isn’t worth it. Ditto, owning a home. I save up change and put it towards debt, I have always paid off any loan early. I go to the library to save on books. We walk a majority of the places to save money on transportation (ttc). Don’t drink or smoke due to expense.
Spender: When I did my 6 month analysis, I found that I was spending on average $200 on crafts with an overall defecit each month. I deluded myself into thinking that because the “name on the loans” is RSP, that it wasn’t bad debt. I upgrade to the super sports pack to watch all the NFL games and probably always will. A budget I made 4 years ago, while having debt, included line items such as massage, books, casino – (shaking my head). I fall for the marketing frequently and upgrade my computers every 2-4 years, and buy the “best” at that time.
But it’s coming around slowly.
I would disagree with Gail on one thing — organic food. After watching so many documentaries on food processing, pollution etc, I don’t much see the point of having money, if you’re poisoning your body and your health is compromised (to what extent?).
Did you know how much pollution is found in China? trust me — not a very environmental place. Do you know how exceedingly hard it is to buy garlic from anywhere other than China?
And the hormones given to animals — etc. If given an organic option, I will purchase that. However, any substitution that I make for country of origin or certified organic, still has to fit within my food budget.
June 14, 2010 at 9:37 am
We have no cell phones, cable or TV. It makes for a very funny phone call from telemarketers wanting to “save” us money on a bundle for our electronics. I can actually render them speechless because they have no concept of a person not having those things and yet still be normal. Oh, and when I was in college I had no internet and then when I went onto my clinical rotation, I had no landline either.
I’ve traveled a bit and seen some of how the world’s poor live. I haven’t seen much of it, but enough to know that I am one of the richest people on the planet and enough to make me grateful every single day for what I have.
June 14, 2010 at 9:45 am
One of the biggest places I see lifestyle inflation is with children. It really is unbelievable the number of toddlers you see wearing designer clothes, or small children with cell phones. Not only do they have cell phones, they have smart phones, not just a basic model to make an emergency call to mom or dad. Remember how not long ago, Blackberries were more or less exclusively for business professionals because most people didn’t need them?? Now apparently this is a need, even for kids!
I’m becoming very worried that today’s generation of kids is learning that if you want something, you just get it. If we think that the average Canadian has debt problems today, just wait until these kids grow up.
June 14, 2010 at 10:03 am
Internet is a need in our home as I do my school work online and my daugter also uses internet sites for her school work. The school is working towards having the kids log into a site to do and submit their homework instead of papers coming home.
We are movie addicts but instead of buying movies or pay per views I added the $15.00 month movie chanels to our basic TV and we get to watch tons of movies. It is cheaper than renting a new movie once a week and defenetli cheaper than going to the movies or even buying them at Walmart.
I am with Gail, I am happy with my old style 28″ TV and my 1991 car. Not interested in the Flat screen plasma giant Tv or the new off the lot car. I actuall y like the luxury interior of my car that you don’t find much now days with plastic and cheao fabric seats.
June 14, 2010 at 10:12 am
Man, doesn’t anybody LIKE their big screen tv, their cellphones, their internet, their netbooks, etc? I mean I don’t get why having nice things that make life easier/better is portrayed as ‘lifestyle inflation’? I mean your grandparents in your example could have said that your parents having indoor plumbing was lifestyle inflation, but for me personally I don’t want to use an outhouse. If you can afford it, and are making reasonable plans for the future and have emergency funds and all that other good stuff, I say go ahead and pick up that fancy BMW you’ve had your eye on.
June 14, 2010 at 10:17 am
When I compare the lifestyle we live to the lifestyle my parents lived when they were our age, there really isn’t a huge difference. We have some of the modern conveniences that weren’t invented back then, but otherwise, our lifestyles are fairly comparable.
Things we have that our parents didn’t have when they were in their 40’s: a dishwasher, cell phones, cable TV, a computer and internet (though they do have all those things now). Other extra expenses that my parents didn’t have back in the day are: commuting costs, RESP savings accounts, increased school costs to buy school supplies and pay for organizers and school trips, chiropractic expenses and orthodontics.
Things we purposely have chosen NOT to “inflate” to: yearly family vacations, hot tub, pool, professional landscaping, fancy expensive patio furniture and climbing structures for the children, maid service, nanny service, huge flat screen TV’s, fancy kitchen gadgetry, meals out every week, expensive hand held wireless stuff, massages and spa treatments, and probably a few more things that aren’t coming to mind right now.
I prefer to keep life as simple as possible. My kids aren’t running from one activity to the next all week – I just could never keep up a schedule like that and remain sane! Hubby and I don’t go out on “date nights” every week, and when it comes to birthdays, the kids do NOT get a big birthday bash every year. Family vacations are once every few years and usually only a weekend away. We’ve never gone away on a plane or anywhere for a week or more! Christmas is kept relatively simple with under $150 spent per child. We save expenses by buying most of their clothes used and enjoying a variety of hand-me-downs that find their way into our home. Now that the kids have “their own money” they aren’t begging me to buy them the latest and greatest toy seen on TV. They carefully count what they have to spend and decide how to creatively stretch it to meet their wants and needs. Giving them their own money to manage has taught them a great deal about the difference between wants and needs, and taken a lot of pressure off us to buy this and that because it is the desire of the week!
June 14, 2010 at 10:26 am
How timely, as usual. I just spent the weekend with family, celebrating my aunt and uncle’s 50th Wedding anniversary. A lot of the program/visiting with cousins recalled how us 15 cousins had to play outside and entertain ourselves while the adults would play cards. Us four oldest girls would do one thing, the next age-related group another, and so on. My older cousin and I decided that we were going to climb that ‘mountain’ of a hill behind my uncle’s house, and check out the huge rocks we used to play around. The hill doesn’t look so big now! My uncle’s city grandchildren had a blast riding his horse, and turning the eggs in the incubator. I didn’t remember that my father had built both the houses for my mom’s siblings when they were newlywed’s and they still live in the exact same non-renovated houses!! Speaking of Tv’s, the grandchildren did a lot of switching, and replacing the farm televisions, but none of them were big/flat screens, just newer. I remember my uncle’s phone was one that you held the ear piece to your ear, turned the crank, and spoke into the funnel. Our first phone’s ring was one long and two short, and you just hoped that you could get the neighbor’s off the party line!! I bought my own phone years ago because I didn’t like renting from Sask Tel. My $30 phone is soon ready to be replaced, but it has still saved me money. I have a 27″ Tv, that is doing fine. I don’t even know what Tivo/blue ray is; I got a cell phone years ago for a road trip, and buy minutes as needed. I get a lot of ribbing because I don’t know how to text. I’m thinking that a lot of people would soon realize how dependent they are on their electronics if the power went out for 24 hours or longer! Good time to invest in a manual can opener!! My parents raised five kids on minimal income, instead teaching us how to be self sufficient in feeding ourselves through gardening, hunting, raising/butchering our own meat, etc. Personally, I wish things could/would go back 50 years or so, when life was simpler, and just getting by was enough.
June 14, 2010 at 10:41 am
@Jay You should be more worried about the brain damage the children will suffer from the cell phones. Another documentary I watched (I think I need to watch more comedies) showed a brain scan of the microwaves and the effect on a child. The canadian government recommends that no one under 16 use a cell phone for anything other than texting.
June 14, 2010 at 11:05 am
lol sometimes I read this comments and it seems like everyone is just trying to out-compete each other in frugality. It’s one thing to cut your expenses if you need to, but there’s no shame in enjoying yourself if you have the income — the few posters that said their kids aren’t involved in any extra-curricular activities, that’s sad! Team sports & hobbies are a great life experience for a child! They’re very important. I wouldn’t put them in the “need” category, but I definitely would never deny my (future) children being on the community league soccer team because they don’t “need” it.
I don’t really think about what my parents had in the past. Psychological studies have shown humans tend to remember the past better than it actually was. We love to soak in nostalgia and romance our “simpler times”. Ha.
I’m sorry, but I need the internet. I can’t do my job or school without it. Same for the cellphone. My parents had jobs that allowed them to go without these things, because they grew up when they weren’t invented. It doesn’t mean they were “better” at saving money.
But yeah, I don’t have Blu-ray or a 3D TV or an iPhone. I don’t even have a car (bike works fine!!), and the boyfriend’s car is older than we are. I own some designer items.. but I bought them from eBay. It balances out. I don’t get the holier-than-thou mentality in living poor if you don’t have to. If you have spending money, enjoy it. Don’t keep your kids out of sports or watch a miniature TV if you can get more enjoyment out of the alternative..
June 14, 2010 at 11:12 am
Inflation – I own a car with actual heating and cooling and no holes in the floor (my poor mother had those kinds of cars). My father always had company cars. I have high speed internet, and 1 step up from basic cable. My cell phone plan is $10.00 per month and I don’t text. I try to fly to Florida to visit my parents in the winter with the kids every other year, but once we are there everything is pretty much free (room & board and car on mom and dad), we ask for tickets to Disney for Christmas.
Same – my parents did take us out for meals quite often. They didn’t “over buy” on their houses, they could have, they just didn’t. We only had one TV that we watched, but there was another in the basement if you were desparate. My mother always dressed us quite well. We had a pool, and snowmobiles. My parents we both quite poor growing up, my father extremely so. They always tried to make sure that we had all the advantages, but they never went into debt to do it. They lived within their means at all times, they skimped on the house and cars to be able to afford the rest.
June 14, 2010 at 11:13 am
I have lifestyle deflation. We have no bed, no sofa, no bedroom furniture, no tvs, no dvd players and no entertainment systems (easier for being nomadic). I “upgraded” my mobile phone after 5 years of using a hand me down. I’m looking to replace a 5+ year old laptop that may or may not give up the ghost. I don’t get the current culture of constant upgrading (the 4G iphone is coming out – whoopee!). Women with 20+ $1000+ handbags. Men with hundreds of pairs of limited edition sneakers. Between 2 people and 1 dog, we don’t have much stuff, but we also have liquidity and zero debt. I think it’s a livable trade-off.
June 14, 2010 at 11:16 am
Who do you have to text when your 13 or 14, or even 8 My brother is 14 and has a cell phone and really?!?! whats the purpose of that I was exilirated when I bought out my cell contract it was cheeper to buy it out then to wait. $20 for every month I had left and min on my cell phone charges 911 fees and all that came out to just under 40 and I only had 3 months left.. felt like a no brainer the b/f’s cell is up ive been using the last 2 months been biking up wards of 40k from town and that is a Need but now that its off contract we just have minuits on it.. We cut back on the Sat tv and I was flabbergasted when my sister didnt have cable but now I get it theres only so much local tv you can watch but I do like to stay “connected” to the national news at 9pm thanks to time change dont have to stay up till 11 and wait for the news so thats a big help too….
June 14, 2010 at 11:17 am
Geoff, I agree with you – but I think part of the point is that we have started to feel as if a lot of things are “needs”. This point was driven home to me by my mother-in-law. I was mentioning to her about how I things are different now, and that both parents now need to work in order to able to afford a family. Her point was that a lot of people who justify their NEED to have both parents working (rather than WANT to work) are spending in a lot of ways that she wouldn’t have. Her point was well taken and I think it is very true.
(Granted – I still don’t know that its possible for a young family in the Lower Mainland of BC to own a modest home without both spouses working… but real estate prices are in a league of their own here).
June 14, 2010 at 11:30 am
Lifestyle inflation as a concept does resonate for me. I think the important thing to remember is that the basic necessities of life are few – food, shelter, clothing, love, connectedness, self-actualization, etc. You can fulfil those in a range of ways – some very inexpensive, and some pricey. Beyond that, it’s all lifestyle choices – and yes, it does seem to me that a lot of things that people did just fine with in decades past are all of a sudden seen as necessities – and in my view they don’t always add a lot to our quality of life.
For example, most people see cable as a necessity – I haven’t had cable for years because I find TV makes me feel bad about myself as a way to try to sell me stuff, experiences, etc that will make me feel better. For the few shows I watch, I go online – internet is a necessity for me, both for work and for the way I interact with friends and family that are far away. What is necessary and what is not will of course differ from person to person.
I think the important thing in the end is to think carefully about what we see as necessities – question whether they really are, and if so, make the hard choices most of us have to make about what we’ll forego to provide for that necessity. If you’re in the happy position of being able to provide for all your necessities and then have money left over – fantastic, go out and buy whatever toys you want to with your surplus. But, as Gail might say, if you’re going into debt to pay for things you’ve convinced yourself are necessary without taking a good, hard look at whether you really need them or whether they truly bring value to your life – you’re a dope
June 14, 2010 at 11:39 am
I don’t like cell phones but I own one which is used 99% of the time for work purposes (and my employer pays for it.) I have no interest in Ipods etc. But I sometimes feel that technology is forcing me into things whether I want them or not.
My computer is for me a need. I use it for photo editing, work projects, keeping in touch with family and friends who are spread over many time zones, and I often use it for referencing information which has allowed me to get rid of a lot of books. Also a lot of companies force you to go on-line if you want any info/help/details etc. Do I waste time on it? Unfortunately I do that too.
I’ve never owned a new car until two years ago, always bought used before. I drive my cars until they croak and I resent every dollar I put into it. However, where I live there is no other option for commuting. So it’s a need. If I didn’t need one I wouldn’t own one.
My parents paid for everything with cash or cheques (which never bounced) and lived very frugally as they were poor. They were very good at distinguishing needs from wants. I avoid debt as much as possible and pay off my credit card every month, but I recognize that my needs and wants sometimes get confused. I’m trying to be more savvy when I shop and I’m still working on my shopping self-control and I’m trying to learn that just because I can afford something and like it doesn’t mean I need it. Gail’s blog has helped me a lot.
June 14, 2010 at 11:44 am
Speaking of flat screens – our 6 month new 50 inch plasma just stopped working about a month ago..husband wanted it for watching sports. It had replaced a TV that worked for 20 years..sigh. It’s finally fixed now but during that time our family found that we didn’t really care anyways if we have TV or not.
I have learned how to slow things down and appreciate the little things. I still have internet, cable a cell phone and have to for my business but in my down time I really just love to read (love the library!), sit by an outdoor fire or sit on the front porch and relax without distractions. Either that or we go blading, walking or biking. It reminds me of when I was a kid and I had to go outside and figure out how to entertain myself all by myself. It was great and I was rarely bored!! I see my daughter doing that now and I just love it. We live in a little house that will be paid for within 10 years. No debt and savings growing every month. Two paid for cars that are oldish but who cars anyways. I always cook our meals at home except for special occasions. I did this mainly to cook our meals from scratch so I know what is going in our food. Have you read the ingredients lately in processed food?? EWW.
The peace of mind living this way is so amazing! I wish I had known this years ago – I would have a lot more saved by now.
I’ve recently started trying to grow a garden too and can’t wait to see how that turns out
Happy week everyone!
June 14, 2010 at 11:44 am
My 7 year old son brought a home a picture the other day that he had to make in school…the title at the top was Happyness (he is working on spelling..L0L) and then he had to draw things that made him happy .. the biggest drawings were a DSI and an IPOD touch.. OUCH!! my husband and I didn’t even make it on the picture!! Although his beloved blanket did..
my son has a DSI that he purchased with his birthday money he saved and is currently hoarding all his money in his spending jar in hopes of getting a IPOD touch .. I would never buy a 7 year old an IPOD touch simply becuase he thinks it’s cool but if he has enough focus to save up all that money to buy it on the $6 we give him each week I will drive him to get it!! It will take him a year to save that much money!!
I figure we are doing something right though because given the choice of playing an electronic game or going to the park with us or riding his bike or playing hide and seek the DSI is forgotten in seconds.. it’s not even a choice for him.. as a few said modern gadgets and such have a place.. and can be a valuable teaching tool..
June 14, 2010 at 11:47 am
Our little one (3.5) is really helping us out, because he doesn’t like to eat in restaurants. My husband and I are often ready to go out but my son would say let’s stay home and eat. Sigh. So I have to cook
I can totally see him say to me one day, mom wouldn’t you rather put that money in my RESP?
June 14, 2010 at 12:34 pm
My way of dealing with the yearly inflation that always hits us is to save for it. We are fortunate that my husband gets a 2% cost of living raise every year. I laugh because this of course does not come near to covering real inflation but every bit helps. Once our debts were paid off we started a column on our budget sheet that is called “Inflation and Transfers”. We put 2% of our net monthly income into this column and let it build for a year. Then when inflation hits (our property tax went up $160 this year) I just transfer the money to make up the difference and then I adjust (increase) the budget for property tax for next year. This way we are never short when prices and costs go up. I can’t say the increases are unexpected because I know everything goes up but the amount and when it happens is always unknown. Over the past 4 months we have had increases in property tax, water, gaarbage, sewer, telephone, cable and house insurance and of course in groceries and bouncing gas prices.
June 14, 2010 at 1:07 pm
We certainly do have different wants than our parents had at our age and much more expensive wants! The issue in our family often comes down to agreeing on our wants and needs. However, from watching Gail’s show I learned that we needed to save for our wants and luckily, my husband agrees. My husband is a TV addict. A year ago, he wanted to buy a $1500 flat screen TV and a $500 PVR. I did not see the need for either of those things and I did not want them. We already owned more TV’s, VCR’s, video game players, DVD’s and DVD players than we had rooms to put them in! I could see however, how important those items were to him, so we made a deal. If he could raise the money to buy his new toys and get rid of the old ones to make space, we could buy the new TV and PVR. He had to have the money in hand before making the purchase – not just promise to raise the money at some point. He sold two beloved vintage amps that he had bought years before we met, donated or sold all the extra tv’s and related equipment and was able to pay cash for both items.
June 14, 2010 at 1:19 pm
It seems it all comes down to “need” vs “want”. It seems like today’s society is confusing the “wants”…..the media is bombarding us with what they think we need.
I think back to growing up and constantly asking mom/dad, why can’t we have that/do that? The problem I had, as well as my siblings, is that mom and dad knew the difference between the needs and wants……and with the budget they kept, there was no room for wants.
Then again, their life experience truly taught them what a need is…..my mother was born in the 1930s in Saskatchewan, in a large family. Growing up in the depression on the prairies is an experience I wouldn’t want. My mother recalls her mother unravelling holey sweaters regularly so she could reknit them, during the rare times she wasn’t gardening or cooking. My father was born in Romania, and lived through WWII — his family came to Canada in 1950. His stories of life during the war are insane….twice daily bombing runs….starvation….. They both have an appreciation for what we have, that I don’t think today’s generation will ever understand.
June 14, 2010 at 1:21 pm
I don’t have cable and I don’t miss it – got rid of it last year.
I also stay away from acquiring the latest electronic gizmos and my cell phone is a very basic one which I rarely use.
I do think good food – particularly organic fruit and veg is important and I think it’s a shame that more people don’t recognise that. When I was growing up my parents grew a lot of their own fruit and veg without pesticides. Now with GM crops and crops grown with pesticides it’s actually an effort to track down good sources of healthy natural foods grown in season – I come from England where we have banned the use of GM food unless it is labelled and where we’ve had a number of really nasty health scares with our food chain. In comparison people here seem to shop by price and are not so aware of the hazards we’ve faced and fast food is so ubiquitous here too. Food really affects health so the price of good food is something I’m willing to pay with the hope that down the line I stay healthy which ultimately costs the country less in health bills. Personally I think fast food and soda should be taxed relative to the costs that incur on people’s health.
June 14, 2010 at 1:23 pm
Diana – I love your story with your husband and the tvs. Sounds like an excellent compromise! I think that’s a great approach to take for those who have kids too.
June 14, 2010 at 1:38 pm
@ Angela – I couldn’t agree with you more!! Really trying to buy more organic wherever I can. I’ve been reading and watching documentaries about the general food supply – scary stuff. I wish we had the same laws here in Canada about labelling GM products. Sorry – guess this is off topic. I am gladly spending more on food these days but I haven’t felt this good in a long while now that I’ve cut out processed food and gone to local and organic fruits and veggies. Eating less meat too helps…
PS – if it were just me cable would have been gone long long time ago.
June 14, 2010 at 2:27 pm
I’d just like to point out that buying quality food for companion animals is not really a silly thing to do. First of all, scraps off the table will not benefit them in any way….cooked food does not have all the nutrients dogs, and especially cats, require. Secondly, investing in a quality food now can save you loads in vet bills in the long run. Cancer, diabetes and heart disease have increased exponentially in companion animals, a sad result of living with overweight, overindulgent humans.
June 14, 2010 at 2:28 pm
And Karen! Very cool that you are vegan! Me too, for four years now. Cut the grocery bill drastically and boosted my health tremendously!
June 14, 2010 at 2:29 pm
Times have certainly changed drastically as far as what is available in the marketplace but needs have not changed so much. Internet is necessary for many jobs and school programmes and a cell phone is often a job requirement.
However the scary part of this is the negative effect electronics can have on children and teens. Many children do believe having all the latest gizmos would make them happy and teens and even tweens think that they must have a cell phone. Cell phones are not a necessity for a teenager or younger child. Playing actively with siblings and friends is far better than playing electronic or computer games. Interacting face to face and learning to carry on a conversation in complete sentences is a need; texting is not.
June 14, 2010 at 2:36 pm
My mom stayed home until I was about 13 before she got a job. Before that it was just my dad working. We had the bare minimum, but there were no cell phones and no internet. I played outside and wrote a novel (never got it published, but still!) and my sister was on the phone 24/7 with friends. We didn’t need much more than that.
I still would prefer to live my life very simply… Although I don’t think I could handle no internet anymore. I read, I take the dog for walks, and play with the pets, I talk on the phone to family, and draw and write with my hubby. That’s how I spend most of my time.
June 14, 2010 at 2:46 pm
My brother in law is a sucker for all the bigger and better electronics .. mostly for the status factor of owning the newest version of whatever it may be… he was chatting with my husband about the IPAD and how great it was.. my husband says later to me I think I want an IPAD.. my answer to him was that he was welcome to go buy one if he could name me 5 things an IPAD can do that the laptop we have or an IPOD touch can’t do.. he couldn’t even think of one.. so other than the “cool” ( I use that adjective loosely as I don’t think there is anything cool about the IPAD or IPhone or any of that other crap)factor of the Ipad there was nothing my hubby could point to as a reason for needing one..
June 14, 2010 at 2:49 pm
The money I don’t spend on toys gets eaten by treatment to keep me sitting in a chair! As a self-employed and (sadly) aging worker, I find myself spending a lot more on massages and physiotherapy, just so I can continue to sit behind a computer, which eventually takes its toll on the body. Most of this cost is not covered by insurance and comes out of my pocket. It is the one expense I have that really adds up.
June 14, 2010 at 3:06 pm
my mother basically single-handedly raised 8 children, while my father was serving in the navy. she taught school all day. i often saw my dad working weekends, just to make ends meet. a need is making sure all 8 children have a warm dinner & love. a hug & prayer at bedtime. reassurance, approval, discipline, the intangibles. we took vacations every year, frequently criss-crossing the us to see the sights of national monuments, forests, visit family, etc. my father never even had a credit card. if something was needed, he paid cash. my mom could make a dollar go further than anyone i knew, she ran her household on a strict budget, and stuck to that budget like glue. both my parents saved judiciously for retirement, 8 childrens’ university educations, weddings. they rarely drove new cars, and we had 1 black and white tv. while my mother did use a single credit card, she never carried a balance.
my daughter has many of the gadgets & electronics the young adults have now. but she saves to pay for them, or asks for them as a gift for b-day or Christmas. she has her savings, is paying off her loans, doesn’t carry a balance on her cc. and, at 28, she has already been investing in her 401k plan for 3 years. she knows time is on her side now.
i am in between. it is now, when i am 52, that i realize many of my needs are just wants gone crazy. now that i have gail on my side giving me daily advice and good information, i can see that having a car is a want, not a need. 15 minutes to walk to the office & public transport all around me? a need is making sure i have shoes to do that walk. a need is packing my brown bag lunch and being thankful i have a lunch. sometimes i want that new outfit, those shoes, that manicure pedicure. but what i’ve learned is that instead of buying on the spur of the moment, i think about it for a day. and if it is still a burning desire, and i have the cash safely saved, i will purchase it. my needs, as someone so intelligently pointed out already, a basic. my wants are little mosquitos, buzzing around my head, trying to get me to forget my big goals. fortunately, thank you gail, i have the tools to decipher a true need vs a want.
June 14, 2010 at 4:37 pm
Good points about needs vs. wants however I wouldn’t go back to the “deprivation” of my youth for anything! We had next to nothing because we had nothing, not because it was a simpler time. I agree with one of the posts that said we see the past in rose coloured glasses…I don’t and it certainly wasn’t a better time than now.
Yes, we have SOME of the “wants” of the current age/generation but they don’t dominate our lives and I think that is the balance that we should be striving for in life.
Although food and shelter are needs…I can guarantee after being a child growing up with pretty much only the needs covered…life is much nicer when you have the ability to add a few more things that you decide are necessary for your desired “quality of life”.
June 14, 2010 at 5:33 pm
lol Geoff. Sometimes it seems like the echo chamber of frugality for frugality’s sake on this website.
I experienced the “living only with needs” lifestyle – no internet, basic phone, no TV, only food, shelter, second-hand clothing, one crappy car – when I was in school and the kids were little. Now that I am gainfully employed, I enjoy my lifestyle creep and do not consider frugality as the be-all end-all.
June 14, 2010 at 7:10 pm
My parents also grew up in the prairies during the depression, and we had a very modest upbringing. All our needs were met, but not all our wants, which seems to me as it should be.
My only lifestyle inflations from my parents’ lifestyle is internet and cell phone service. I don’t need cable TV or satellite radio, and am thrilled to not need a car either.
I do buy organic food, but I’m a vegetarian which keeps food expenses down despite the cost differential.
All of this is a change from how I was a few years ago, wasting money on designer purses and shoes and jewelry. In the past few years I have seen the light and am presently only a few months away from paying off my last remaining credit card. Then I will really be free at last!
June 14, 2010 at 7:49 pm
My daughter wrote a piece for school a while ago, that talked about how I, her mom, grew up in a large beautiful home on the water and went on vacations to places like Hawaii, California, and Europe… It made me wonder what kind of messages I was sending her, because while, yes, that was all true, we also lived VERY frugally; my parents being house rich, but cash poor, and trip to Europe being won in a contest, and trip to Hawaii and California being paid for by an inheritance…
I am very happy with our current lifestyle. Yes, I live in a house half the size I grew up in, and don’t have the same style of vacations, but I am still raising my children much the same way that I was raised, that is, to teach them to be conscious of how you spend your money, that it doesn’t grow on trees, but there is some enjoyment that can be gained from it. We camp at a nearby campground on a lake on weekends, we travel once a year, the kids have the styles and the name brands they desire (mostly bought on sale, or second-hand, or hand-me-downs), and a few of the desired electronics. And, my daughter knows how to save, and reasons for saving, and while only 14, has contributed about $1000 herself in babysitting money to her RESP’s.
I think we have a great balance, and as long as the cheque book balances at the end of the day, that’s what matters.
I get the organic food lifestyle; I agree that spending more money on food can be considered a need, but I can’t see supplements as being a ‘need’…. I also choose to spend my money on VoiceMail vs the home answering machine — I hate “stuff” that wears out and has to be thrown away after what seems like a short period of time, and will just end up being landfill. Thus the reason why we haven’t upgraded our TV (it’s 20 years old), nor our fridge (18 years).
As for the kids in sports thing, I believe it can be considered a need, based on where you live, and how active you are as a family. The health of my children and getting appropriate exercise is a definite need, as being as we don’t live near other children for them to play with, organized sports is a must. It also helps with motivation. In winter, we try to get out skating as a family once a week, but often we get caught up in “but I have to get _______ done” (fill in Laundry, cleaning, etc.) Organized sports takes care of that, because it’s a more defined commitment.
June 14, 2010 at 8:40 pm
There’s a huge difference in lifestyle for me since my parents raised 8 kids in a 1200 s.f. house on a farm. We grew 90% of our own food and I don’t recall my parents ever going shopping together and don’t even recall my mother going shopping (recreationally) on her own either. For Christmas, we’d get a couple of items of clothing, one individual toy and a game for all of us.
I recall my dad reading to us from the paper that “surveys showed that kids cost $250k to raise” and complaining about how expensive we were to raise. Considering that we were a cheap source of labour for shoveling manure, feeding animals, working in the garden and picking rocks, my guess is that the actual cost to raise us was closer to $10k apiece.
We went on only two family vacations in my growing up years, one of which was to visit family and once for a long weekend at a cabin – where only my mother took 4 of us kids, everyone else stayed home.
Even for the time, how I was raised wasn’t typical and I think I mentally rebelled at the extreme frugality once I was old enough to leave home.
Needless to say, my dad is a multi-millionaire but has led an impoverished life in anything BUT money. There’s truly a balance that has to be struck.
June 14, 2010 at 9:15 pm
absolutley great post, i loved it! totally along the lines of things my hubby and i talk about often, though we definitely have some lifestyle inflation too-PVR, cell phones, buying coffee. We only have 1 tv which is the old tube style that we will have until it dies, no flat screen for us. I don’t understand bottled water, more for environmental reasons though. i don’t understand high priced strollers for babies, ipods, blackberries, cell phones for kids, having kids in activites every night of the week. although technology has done great things for us, they also have complicated things, and i think take away from family life a lot.
June 14, 2010 at 9:45 pm
I have just finished reading Gail’s blog as well as all the comments posted. Some really interesting points! From a new mom’s perspective, I recently finished my maternity leave, and find myself the only mother from the weekly Early Years Centre baby group not returning to work. I am the minority. It really took me off guard. However, it is a decision my husband and I made together before starting our family – I would stay at home to raise our children since his salary was more than mine. Yes, this means living on a budget, not having everything our heart’s desire and making more effort to do things. For instance with our daughter, we: use modern cloth diapers – this means doing laundry; purchase most of her clothes and toys from consignment or thrift stores – this means examining each items for stains, rips, function etc; and puree table food – cooking, blending, and storing. I nursed her as well, so that was nourishment for free. I realize and respect the fact that not everyone is able to follow suit. However my point is, by taking the extra time to do the extras like diaper laundry, or preparing food we are able to save costs. how life turns out!
June 14, 2010 at 10:42 pm
Plant based foods (not meats, eggs or dairy) are so shockingly inexpensive once you get the hang of it – especially if you buy local, in-season produce.
Restaurant meals can be every bit as fancy and fun, but will delight you when the cheque comes. Same thing with the low grocery bill. I dropped my gym membership – since I effortlessly lost about 10 pounds eating great food. Food safety issues are also a big perk – things don’t “go bad” as fast. No one in our family had a single cold this winter. My skin cleared up and I cancelled my pro-activ solution too. My son’s athsma literally went away! It was very very cool.
I was a serious omnivore and tried a vegan diet on a dare, for 30 days. It was such an awesome change that I stuck with it, and one of the major reasons was the financial component.
All in all, I think that my sudden vegan lifestyle has saved me about $7200 per year. ($350 per month in reuced grocery bills, $200 in reduced restaurant bills and $25 per month in reduced personal care like cold medicine, kleenex, and cough drops) and $25 per month in no need for fancy skin care.
Even if one boosted their menus 3 times a week, people would see a serious difference.
June 15, 2010 at 7:58 am
Jennifer, Congrats on your mutual decision! I stayed home and for our family it worked best for us. I would have been paying more for childcare than I would have made. We made our budget work on one income. My kids are older now and I have returned to work part time but I treasure the time I was able to spend with my boys.
June 15, 2010 at 10:22 pm
A couple mentioned not having cars because you live in Toronta .. What do they do to you in Toronto that is so expensive?? :-O
SOmeone else said that if you have the money then there is nothing wrong with getting what you want .. and that’s true enough but I it’s the people that DON’T have the money that is the problem. They see everyone around them that have got the latest thing so they have to have one too .. and they go and borrow the money, or put it on a credit card or go for the interest free periods and so on.
hehe I like being frugal. I splash out in some areas but for the most part I’m so tight that Ferris Bueller could have been talking about me with a diamond …
June 16, 2010 at 7:00 am
Jill, there’s a multitude of answers for that!
1. House prices are quite high – for an actual house that isn’t in Scarborough/Etobicoke, you’re lucky if you can find a tiny 2 bedroom for under $350 k (and even that is pushing it!). In the neighbourhood I’m renting in, the house prices are in the 800 k range.
2. Many people have to purchase parking permits, or buy parking spaces if you’re in a condo/apartment
3. Parking in general once you leave your home
4. Traffic to get anywhere can get pretty ridiculous
June 16, 2010 at 8:04 am
I have to agree with Geoff. There’s nothing wrong with buying the items you WANT if you can AFFORD them. BUT, there is also nothing wrong with being frugal if that is what your need to do or it’s important to you.
I think Gail was trying to say that it’s all about balance and being realistic. Do you really need the new TV or do ya just want it? – If you just want it, are you going to suffer in another area for it? (go into debt).
I think Pepgirl said it best with the example of finding a balance.
As another poster said, we live differently from our parents generations because we have different *stuff* than they did. I find that myself, and several of my friends, are trying to raise our children to find a balance between today’s world and learning life without the bells & whistles of technology. My son is 4 1/2. He does not have a video game system. He sometimes gets to play game son the computer, but I don’t feel that he has a need to play video games at his age. I want him to enjoy playing outside and learning to entertain himself.
As for extracurricular activities, he was in swimming lessons for about 2 years. It’s important to me that he can swim because we live near the ocean and a lake. This spring he decided he didn’t want to go to swimming class anymore. I had to make the decision to just stop the classes for a while and give him a break. He’s in daycare all day and playing & learning with the other kids. Sometimes kids just need a little down time too. When it came to the swimming classes, it became work for me to have to get him there & back etc. We will re-look at swimming again in the fall. I grew up without any extra activities and that was okay, but I think it would have been beneficial, had my parents been able to do so. I’d love to put my son in hockey, but I simply cannot afford it and I’m not going into debt to have him play a sport. If he really wants to play hockey in the future, I’ll consider it then, but I’m not encouraging it when he presently shows no interest. I am however, considering getting him involved in martial arts which I feel will be good for his health, his self esteem and to learn self-discipline. I just don’t want him over scheduled. As for the arts, I can teach him to paint or anything like that which he might like to learn. His dad can teach him to play the guitar.
When it comes to money & new toys, I do buy him items when I want to, cost permitting, but I also am teaching him to make his own purchases by saving. For example he REALLY wanted to buy Woody & Buzz from Toy Story. His grandmother bought Woody for him and I told him if he had enough money saved up at home we could come back for Buzz, but he would have to save up for it. It turned out he had exactly enough money. Now he is saving for the next thing he wants. I think I’m doing a pretty good job! It’s important to me that he learns how to budget his money and to save since I had no one to teach me about money. Today, my dad is a saver and my mom is still a spender. I think they probably had a good balance when they were married, but it’s interesting to see the differences in them today. I couldn’t believe it when my dad broke down and bought himself a new flat screen TV AND a pair of shoes in the same day! (That was HUGE for him! lol!)
Jennifer, congrats on making the decision to stay home with your child. Don’t let anyone make you feel bad about it either. It will be wonderful for your family.
If I had another child, I would absolutely try the cloth diapering system. I regret not doing that with my son. I did make all of his food and I think it was a great choice for us. He is a good eater and not picky. I think that had a big part of it.