Archive for the ‘Life’ Category

What Will Happen When Frugal Isn’t Cool Anymore?
October 6, 2009

Lately, it seems that everywhere I turn, financial institutions and other organizations are boasting about the increase in the national savings rate. Personal spending is down sharply from 2007, while the national savings rate, which dipped below zero a few years ago, went above six per cent earlier this year, finds James Surowiecki of The New Yorker.

Up until October 2008, the U.S. was at a negative savings rate, which basically meant that, as a country, we spent more than we saved. With the availability of credit, and a strong economy, it was easy to adopt a “buy now, pay later” way of thinking. “There’s so much marketing pressure to spend and buy and have instant gratification. And if you can’t buy it now, put it on your credit card,” says Nancy Register, of the Consumer Federation of America.

In a recent blog post, Thomas J.Fox discussed the “Demise of Affluenza”. He cited a recent Consumer Reports survey that dubbed the new savings behavior intelligent thrift. With the unemployment rate rising, people have had to base their spending on needs rather than wants. Frugal is cool, only because there isn’t another choice. So, is the new savings rate truly indicative of changed behavior? Or, is this a fear mentality?

Once the economy improves, will this thrifty behavior continue? Or will many people simply return to their old ways of spending? History tells us that after 9/11 and the Great Depression, Americans went on a spending spree. Will this be the case for us? Or will the hard earned lessons of the past year pave the way for continued thriftiness?

For the sake of you, me, all Americans (and our nation) … I hope this time financial sensibility sticks around for good.

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