I'm hopeful but skeptical that America's relatively sudden interest in saving will keep but I'm mostly curious to know what you think. Once conditions improve economically, do you think Americans will go back to their spendthrift ways or do you think that the current crisis has or will radically alter American consumption and that we're entering an "Age of Frugality"? In short, are we seeing a "Thrift Shift?" Please comment.
-John
5 comments:
Interesting post, John. You know, we talk about the frugality of our grandparents' generation and often attribute it to them being old enough to remember the Great Depression. Could it be that our kids will be thrifty for decades to come, because they are old enough to remember the American Economic Crisis of 08/09--or whatever it comes to be called? (Obviously, adjust for generation, depending on your own age.)
I think so. And I don't think it's only because of the current economic conditions. As the NPR chart shows, savings levels started to go up before the worst of the current financial crisis hit. I think that financial education efforts, public awareness efforts, and a gradual, collective realization that buying more stuff doesn't make life better--combined with the current economic realities--has led many consumers to re-think their priorities. Let's hope so, anyway.
I also agree with David Wessell that selling Americans on the idea that they really need to save more--just not right at the moment--is a tough concept. Good luck to us all.
As far as the Thrift Shift-it made me smile a bit. I think there is
some truth to being a little doubtful. However, I think there will be more people interested in saving. People have been living way beyond their means for decades and it has finally caught up with them. Saving has peaked their interest not only in doing it but teaching it to their kids. People that I have been talking to have been shifting their money to community banks and credit unions and away from some of the bigger financial institutions. They want local people and local nstitutions handling their money. So there is a local solution to a national problem.
Integrity is actually counting for something these days. The other interesting item is that we (credit unions) have money to lend-lots of it and people are hesitatant to come in for loans. They are coming in to deposit-to save. People are holding on to the things in life that are simple and uncomplicated.
The other surge has been in parents wanting to get good information to their kids. And kids are wanting to learn because of what they are seeing their parents go through. The emphasis on financial literacy as opposed to financial education is huge. Not just learning about money but applying it to every day life. There are lots of different people, insitutions and variables that have contributed to the economy as it is today. It will be interesting to get a pulse on our communities a year from now. One of the questions that every business should be asking is as businesses, what are we doing to help our community grow stronger, healthier and build hope? I would think that every business would pitch in to find out what they could do to help their families, their youth and their community to come out of this in a much better place than when they went into it. It is terrible to lose a house but tragic to lose a family.
It's human nature to seek pleasure over pain so cutting back during these times is not the preferred choice of many… unless it becomes a necessity, in other words, a "forced choice".
As the economy improves whether people continue those thrifty habits is a mixed bag- some will and some won’t. The wise ones however will learn from their experience, teach their children well, and understand recessions have a way of repeating themselves.
Kristan Leatherman, M.S.
Author of Millionaire Babies or Bankrupt Brats?
Love and Logic Solutions to Teaching Kids about Money”
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