Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
As I mentioned, a lot of it comes down to basic skills that many people don't have. When I see some of the snoots on here sneering down at people who don't manage money the way THEY do, it sounds just like a mechanic sneering at people who don't understand how an engine works or techies slurring "users" for not knowing how to fix a computer problem.
You don't know these things unless someone teaches you. I was broke most of my adult life mainly because of a bad marriage, but I also really had no idea how money management worked once I got rid of my husband and paid off the debt he'd accumulated for me. I learned relatively late in life, in my 40s, how to live on a budget.
I love my mother. She's 89 years old and still beats me at Scrabble, but she dropped the ball when I was a kid and she could have taken a moment to teach me about saving. She herself was extremely frugal, a Depression kid, and in spite of not having finished high school, she was the one who handled the family finances and paid off my parents' 30-year mortgage in 13 years, and she managed my dad's salary to put a good meal on the table every night for ten people.
I got an allowance of 50 cents a week if I did my chores, and I remember figuring out that if I saved 25 cents of it ever week for a year, I would have the princely sum of $13 at the end of the year. Excited, I told my mother about this discovery, and her response was "Oh, you aren't going to save anything. You'll just spend it on candy and junk." This was the old-fashioned "Dutch praise" method of raising a kid--don't let them get hopes up, don't let them get a big head, squash any aspiration like a bug. It's the way she was raised, and she didn't know any differently at that time.
I can remember feeling deflated and thinking, "I guess I won't bother to try to save it, then, since Mom doesn't think I can."
Of course, I can't continue to blame my mother for my poor choices when I grew up, but I really didn't see any use in saving. When I started working as an adult, I spent money going out, I bought the clothes I wanted, etc. It seemed to me that other people who bought homes of their own had gotten the down-payment money from somewhere in a lump sum--an inheritance, a lawsuit, a gift from a wealthy relative. I could not see how it might be possible to SAVE that large a sum of money.
My young adult daughter came to me and asked me about how to budget her money so she can get by on the stipend from her assistantship while she works on her PhD (and gets a bit of help each month from both her dad and me). I was happy to help her budget. She's doing well with what she has, knows exactly what her expenses are, and knows if she will have the money for an occasional movie or pizza that month, or not.
There are skills to managing money that some people don't have. For me, learning to track every expense was just as much a revelation and key to making changes as is tracking everything I eat in My Fitness Pal. I saw how a couple of dollars here and a couple there emptied my wallet sneakily just as too many cheese and crackers piled on calories a little at a time. If something as simple as that is taught to a child early, it could make a difference in their life.
I don't agree with you, for savings used to be much more ingrained in American culture. The 20th-Century average for household savings was around 8.5% of income. That means that people from all walks of life were used to sticking a considerable portion of their income back for a rainy day. It's only in the 80s when the savings rate began to consistently slide below that level. In that sense, thrift is not a function of either education or class.
I don't agree with you, for savings used to be much more ingrained in American culture. The 20th-Century average for household savings was around 8.5% of income. That means that people from all walks of life were used to sticking a considerable portion of their income back for a rainy day. It's only in the 80s when the savings rate began to consistently slide below that level. In that sense, thrift is not a function of either education or class.
I think it's a bit of both. You're correct that the problem is seen across class and education lines. I know people who look rich, but are in fact not wealthy at all. They have fancy houses, drive new cars, spend freely on other status symbols, go out to dinner several times a week, etc, yet have very little wealth accumulated.
Likewise, I know people, who don't make a lot of money, but they certainly spend a lot. They might not have the fancy house or car, but they still go out to eat several times a week, grab coffee when they want it and then wonder why they don't have the house or the savings.
It is a huge problem across class, income and education lines. I do think it's very important for parents to instill the sense of thrift and personal responsibility as well as show them how to budget and plan. We also need to be teaching this to children in schools along with other basic life skills.
I think it's a bit of both. You're correct that the problem is seen across class and education lines. I know people who look rich, but are in fact not wealthy at all. They have fancy houses, drive new cars, spend freely on other status symbols, go out to dinner several times a week, etc, yet have very little wealth accumulated.
Likewise, I know people, who don't make a lot of money, but they certainly spend a lot. They might not have the fancy house or car, but they still go out to eat several times a week, grab coffee when they want it and then wonder why they don't have the house or the savings.
It is a huge problem across class, income and education lines. I do think it's very important for parents to instill the sense of thrift and personal responsibility as well as show them how to budget and plan. We also need to be teaching this to children in schools along with other basic life skills.
I think you're absolutely right. When we moved into a well-heeled suburb in 2006, I had to remind my school-aged children that they were going to run into a lot of kids who had more than what we would provide, and to not envy those friends. People with lake houses, parents who would give their children BMWs for their 16th birthdays, annual vacations to exotic destinations, you name it. I mean, my youngest son had a friend whose parents invited him along on their Spring Break trip to Cabo. Rented a private jet. How the hell do you top that?
One Saturday my assistant's son was playing a high school baseball game at our kids' school, so my wife and I came to watch the game. My assistant, who was wonderful but a bit of a country girl, just couldn't focus on the game. Instead, she was totally blown away by the cars the students were driving--and not in a good way. I just shrugged. Personally, I think if you get a Mercedes or a Porsche at age 16 or 17, where exactly do you go from there? I don't get it. We're the folks that buy CRVs and Camrys at year-end clearance and drive them until the wheels practically fall off.
Then 2008-09 hit. The foreclosures just dotted the map in our zip code because so many were absolutely stretched to the limit on their credit with no money in savings. Hey, we didn't exactly sail through it, given that I am self-employed. But we didn't have to go into the hole either. Yet it was very common for people to simply pack up a van in the middle of the night and left the keys behind for the bank to deal with.
Stupid people don't prepare for the down times. As we import more and more stupid uneducated people and our school systems fail us, the more broke people with no plan when things get bad we'll have. That's why it's a good idea to be well armed and have some food stuffed away like the Mormons do.
I don't know about the well armed bit, but Mormons are definitely into food storage.
I don't agree with you, for savings used to be much more ingrained in American culture. The 20th-Century average for household savings was around 8.5% of income. That means that people from all walks of life were used to sticking a considerable portion of their income back for a rainy day. It's only in the 80s when the savings rate began to consistently slide below that level. In that sense, thrift is not a function of either education or class.
I can't say I totally disagree with MQ, but I more agree with you.
However, in MQ's defense, the thing that started changing in the '80s was it was much easier for people to borrow money for things they couldn't afford, whether it be houses, cars, or use of credit cards. Due to a court ruling in 1978, it made it a lot easier for banks to issue credit to anyone with a pulse and unfortunately, people took the bait. Elizabeth Warren talks about it in her book The Two Income Trap. I don't generally agree with her politics, but most of the book made a lot of sense.
I believe the court case was Marquette National Bank vs. First of Omaha.
Which is perfectly consistent with a postwar boom that began to fade by the mid-1960s.
Perfectly consistent? I don't think so
According to Federal Reserve data from a few years ago, the savings rate even among the "next 9%", which is the highest income earners, excluding the top 1%, is only 12% in aggregate.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
