I spoke with a client recently about the concept of “needs” versus “wants” and that society seems to have lost the distinction between the two. Our over-spending and consumption reflect a mentality of instant and superficial gratification, with little concern for the future.
My client’s parents, born during the Great Depression and now in their early 80s, are still in “saving mode.” They are not spending their money on the latest flat screen TV, Jacuzzi tub, travel, or new car. Instead, they are saving for the long term—their grandchildren, perhaps—rather than spending money freely or consuming blindly.
Why aren’t more Americans living with this mentality? How did our debt grow to at an all-time high, with people buying houses they cannot afford and over-extending their credit cards—consuming for the sake of consuming?
Savings versus Debt: A Startling Statistic
Compare our skyrocketing debt with the declining level of savings and the situation looks even bleaker. According to a New York Times study, the “average annual savings per household in 1923 was $5,533 versus $6,219 in debt. By 2008, our savings had slipped to $392 versus $117,951 in total household debt. And by 2018 the average family savings has grown to $2,100 vs $263,000 in total household debt”.
It all comes down to values: Have we lost them?
My client reported that her parents attribute their “saving” mentality primarily to good, old-fashioned values: hard work; resourcefulness; honesty; fairness and accountability. They don’t place much value on “things” and therefore don’t feel the need to buy things to bring them pleasure. Their satisfaction and security are founded on prudent management of resources, rather than instant gratification.
Bigger is Not Better
“Downsizing” or “right-sizing”, especially in the housing market, has become a popular emerging paradigm. While a large home may be appropriate for some, many have found the merits of smaller homes are very attractive: reduced time and cost of maintenance; lower utility bills and property taxes; less “junk”; more time with family; less clutter; and, lest we forget, maintaining a smaller home is so much easier.
How are your values reflected in your spending?
My client has great admiration for the way her parents manage their lives and their money, and she intends to pass on these values to her children—although some days she feels this is a losing proposition when facing the overwhelming media campaign to consume more and more every day. I hope my client wins her battle against the consumption machine. And I also hope that others will take time to reconsider their own choices of saving and consumption and take inspiration from the example of her parents.
How do your money habits demonstrate your values? Are they aligned?
Kirk Shamberger is a partner with C.K. Financial Resources and has over 30 years of experience in the financial services industry specializing in retirement strategies. He may be contacted at Kirk Shamberger 802-238-8187 or firstname.lastname@example.org.
Related Articles & Free Vermont Maturity Subscription
A New Way to Plan Your Retirement
Will I Ever be Able to Retire? The Importance of a Plan