One of the things I think people forget is that goods that are more expensive today are quite different than the goods we could purchase 50 years ago. Health care is a perfect example. Before the 1970’s hospitals did not have intensive care units. If you had a heart attack on the street, there wasn’t much they could do other than pick up your carcass and take it to the morgue. Cancer therapies? Cobalt, radiation, and surgery. Chemo was in its infancy. Medications like statins did not exist so managing heart disease wasn’t a thing. There was no bypass surgery, no stents, no valve replacement—heart disease just progressed on its own and people died. Health care was cheaper because the product had vastly fewer features and wasn’t consumed for nearly as long.
Housing—land was cheaper because it was more available. Construction—go look at a house built in 1960 and you would find single pane windows, very little insulation, one outlet per wall, a small kitchen with cabinets made of birch plywood, probably not even a dishwasher or space to install one. Three bedrooms, 1.75 baths, a living room, and a double garage. Maybe 1600 square feet. En suite bathrooms were not a thing, nor were walk in closets. It’s not like you could opt to purchase those things even if you did have money to pay for them—they just were not available unless you paid an architect to design a custom home—and even then the amenities were limited by the buyer/designer’s imaginations, and nobody back then thought you needed an entire room to use as a closet.
Cars—same. No air bags, no catalytic converters, no third row seats, no all wheel drive, no air conditioning or power windows, no speakers. It didn’t cost as much because the bundle of products known as a “car” just wasn’t as elaborate.
Also worth noting the Baumol Effect ("cost disease"):
As capital accumulates and production gets more resource efficient, many things that are still labor constrained become significantly more expensive relative to goods themselves.
So groceries (which are heavily automated a all points in the chain) probably really are a much smaller part of the cost of living than they were two generations ago.
That is a really good point—health care is a great example. All of the treatments and equipment that did not exist 50 years ago require trained technicians to operate/monitor.
For my Mom, who was born in the 30s, it was real trauma. Her mom was extremely frugal. She was crazy frugal - even irrationally so: she would turn off the water heater at night so we would have no hot water in the am.
But I don’t think for either of them it was a current cash question, meaning balancing the monthly budget. It was about saving as much as possible against a future crisis. It was less cost than stability of the economy. Because of the laws passed in the FDR years, our economy became much more stable than it had been, allowing us to be lax about “saving for a rainy day.” But they were a product of the more pure kind of capitalism we are returning to, where crises were real and devastating.
We should also confront the idea that we are profoundly wasteful. As a world leader said (can’t remember who, but years ago), “Americans flush their toilets with drinking water”
I try to be frugal because our consumption, regardless of affordability, will end our civilization.
I agree that the budgeting habit was part of it. My mother did the same, trying to make the weekly paycheck last until the next paycheck. But even she is more likely to use a credit card now if she thinks an unusual purchase is warranted (even if it's buying candy for the grandkids). Money is just less tangible now.
"Because of the laws passed in the FDR years, our economy became much more stable than it had been, allowing us to be lax about “saving for a rainy day.” But they were a product of the more pure kind of capitalism we are returning to, where crises were real and devastating."
Brilliant observation!
But there would be costs involved in having two water systems in each house— drinking water and toilet flushing water. I wouldn't want to take a shower in water that would not be safe to drink.
We do it a lot in Australia. All houses are required to have a minimum sized rainwater tank and most newer builds have systems that plumb the rainwater stored in the tanks for non-drinking uses like toilet flushing, garden watering, dishwasher etc. some even go all out and collect and recycle grey water into the garden. The system can switch to town water if the tanks run dry. Most rain water is perfectly safe for any of those applications and we have severe enough droughts routinely to make it worthwhile to put it into building codes for water storage.
Assuming your household is blessed to have a machine… I’ve been the dishwasher and now with 3 1/3 small children, we picked up a free machine from a premature office refit.
Rainwater is actually fine with simple mesh filters to skim out particulates and the odd dead creature that might fall or get washed in. All tanks have a ‘first flush’ that siphons off the water that is the first bit of rain that washes all the crap off the roof before redirecting the rest of the clean water to flow into the tank.
For Australians not on town water (a surprising 20% of the population that lives rural don’t have it) there are kits to further treat the water to make it cleaner than the sky does and add flouride for dental health.
My mom was also born in the 30’s and her brother 15 mos prior. My grandma called them “depression babies” and in some ways her frugality never recognized that the depression ended. But my mother sure did — she swore she was not going to raise children that looked like “rag muffins” and we always had new clothes and shoes. Maybe not a lot of either, but good quality. And yes, my younger sisters would wear some of my dresses if they were in good shape, but never hand me down shoes. Mom had a thing about shoes — she told me she saved up to buy me my first pair of shoes and grandma had a fit that mom wasted good money on new when used would have been good enough. I guess they had a huge fight over it. So sometimes the frugal lessons result in something entirely different. My dad was raised the same way and he was constantly turning off lights and yelling at us to shut the door quickly so all the cool air didn’t escape. So the message stuck with him and my parents made an odd couple for sure. Dad was always trying to be thrifty and my mom couldn’t care less. I am going to repeat something that I heard someone else say — my parents weren’t poor; they were broke. And there is a difference! We had a roof over our heads; a car (eventually two!); clothes on our backs; utilities to keep us warm or cool; home cooked meals. What we didn’t have was much left over each month. Rarely ate out (even fast food was expensive for a family); vacations were spent at a relatives’ or camping; movies were occasionally at a theater but mostly at drive-ins. And mom would pop corn before hand and bring along a six pack of Pepsi. When I think about my parents being broke in their early years, it also occurs to me there wasn’t as much to spend their money on, even if they had it. No cell phones; cable; airfare was for rich people as was fancy restaurants. Food was never delivered as it is today — that didn’t even exist. I think people feel broke today but for different reasons. Whereas my mom insisted on new shoes for her daughter, my granddaughter has a plethora of shoes and the “expensive necessity” is high speed internet access, so she can do her homework. Same problem; different reasons.
I've never been particularly rich nor particularly poor. I hate wasting money on things, so I'm fairly frugal, but I also understand that life is short and time is money, so I selectively splurge. Working more is an option, but it's not sustainable, especially as I get older. I prefer to spend my money deliberately on things that I value. I hate seeing it piddle away due to laziness, like buying takeout because I couldn't be bothered to cook, or paying monthly subscription fees on something I don't use because I forgot to cancel it.
But I agree the obsessive focus on tiny purchases is silly. Every personal finance article seems to track how many coffees a person buys, as if this is a moral measuring stick, but they never really question the big things that are draining their income and trapping them in a payday-to-payday existence, or even debt.
The big questions: Are you living the life you really want, or are you living a life you think will impress other people? Are you just blindly following the crowd through some arbitrary stages of life, trying to hit consumerist milestones? Do you really need two vehicles, or would one do? You live near a subway station, do you need a car at all? Do you really need that monster home and a big yard, or would a smaller home do? All those things cause thousands of dollars per month to pour out of your bank account in mortgage fees, insurance payments, maintenance costs, etc. Trying to offset those large expenses with skipped coffees and 20-cent-off coupons is like trying to empty the ocean with a teaspoon.
I dunno, I really desperately need a Downton abbey style library with rich mahogany molding, 2 stories, stained glass, with ladders, secret passageways, etc. but alas it is not to be
Does it make sense psychologically if we think of it as "We can't afford TO THINK OF OURSELVES AS the kind of people who can afford this"? Expressing the anxious practicality (if we buy this now, we'll have to buy all the treats forever, and that *would* be real money) and the resentful class consciousness (we could become like the weak, snobby wastrels of the elite).
I think that explains a lot of MY parents’ behavior. They were little kids during WWII and came of age in the newfound prosperity of the 1950’s. First generation to go to college, etc. They did not experience prewar poverty personally, but grew up with the habits of their parents—adults who had navigated both the Depression and the rationing/scarcity of WWII. They were really kind of insufferable in some ways—-the frugality was a form of virtue signaling. Canning our own fruit vs. buying canned fruit. What was the real savings? I have no idea. Once you pay for the jars, the sugar, the fruit, etc. Maybe back then it was cheaper because groceries were relatively more expensive in the ‘60’s than now.
I do remember it was a lot cheaper then to buy fabric and make clothing—now it is exactly the reverse. Most middle class women were expected to know how to sew simple dresses and skirts, etc.
I’m not sure if that’s the case if you don’t factor in opportunity cost, like if you’re at home already. Fabric isn’t very expensive and a sewing machine is a one time fixed cost.
Garment fabric is really expensive—a simple cotton interlock knit (think t shirt fabric) is $10.49/yard at Joann, a national chain. That’s a sale price—regular price is $14.99 per yard. It takes about 2 yards to make an adult-size short sleeve shirt, so that is $21 for the fabric alone. I can buy a cotton t shirt for far less than $21.
Yeah, I used to sew a lot before WTO opened up cheap clothing imports from Asia—that’s when it flipped. Prior to 2000, it cost about half what you’d spend retail to sew a garment of equivalent quality (fabric, trim, lining, etc.). Now it is almost the reverse, although it is impossible to find really good quality fabrics anymore—and when you can they are $40+ per yard. Nobody sews so there are no good fabric stores—the chains mostly focus on hobby stuff and quilting.
Yeah. As just a little thing, I *never* remember my mom letting us get a soft drink with our dinner if we ate out or got fast food when we were kids. We could have afforded it, of course. And she judges my sister and her husband a little bit because they aren’t concerned with little things like that with their kids.
Part of excessive frugality is a kind of defense mechanism or a way to feel better about others for being “bad with money”
Elizabeth Warren's "The two incomes trap" explains this phenomenon very nicely. TL,DR: while the price of some optional consumer goods went down [she has specific examples backed up by data], the other fixed costs became much higher (education, health care). As a result, skipping the avocado toast does nothing in the long run of a monthly budget, unlike what the current car prices, with their average of almost $50k [or is it median? Either way, unaffordable to most] and resultant four-figure monthly payment :( Quick napkin math shows that one must forgo 2+ $15/each avocado toasts a day to save enough for that $1000 monthly car payment. So no, it's not avocados that broke our budgets.
The avocado toast example is pretty meaningless. The major question is, did you make the toast at home (in which case it might be quite inexpensive)? Or how expensive was the restaurant at which you bought it? How much time and gas did you spend driving to that restaurant?
Ultimately, there is only so much rational computing one can do in a day (how much gas/time/car wear/accident risk, I may be forgetting something) to decide whether to make it or buy it [whatever -it- is] when costs of daycare are crippling and equal to mortgage payment.
This is what is different between times, the expectations of what one [unionized] breadwinner must bring in to feed his family, with wife available to fill in gaps of cooking, childcare etc, vs non-unionized parents both working , with none to pick up the "slack" of making aforementioned avocado toast.
Since I only have myself to worry about, I balance the rational with how much fun. When you have children, you have to ensure their survival and education. The stakes are far higher.
Warren uses conventional consumer finance analysis, which also treats transportation as a fixed cost, or at least as a high fixed floor.
The Two Income Trap does not explain the phenomenon as much as it is also a reflection of this kind of thinking. It was Great Gen that was the first to plan for the all-car suburban future.
Having the mental habit of "I don't need that slightly pricey thing" is a good hedge against lifestyle creep and the hedonistic treadmill. Had a wise aunt tell me when I was just starting out "the key is to always live on less than you make, significantly less if you can manage it. And remember, the more you make, the more you spend. Be aware of that and proactive against it and you'll never worry about money."
My husband recently got a major promotion and is now making almost 30% more than before and it's a challenge to fight against the "now we can afford _____ " which sure might be a defensible way to spend money but we were doing just fine without ______ before, and buying it interferes with other financial goals we have. "If you make more you spend more."
And "avocado toast" as a meme is about avocado toast *in restaurants* accompanied by a few mimosas which is easily going to cost you $50+ a head even pre-inflation. It's not about how much an avocado and a loaf of bread costs at Food Lion. It's an absurd waste of money for most people to do regularly.
(Also, opportunistic plug for You Need A Budget for anyone interested in experimenting with a different way of managing basic household finances. I budgeted with Excel just fine for a quarter century and decided to try YNAB; it's life-changing for setting a clear picture of priorities and allocations. Make use of the Reddit; it's super helpful.)
As some others have pointed out, food in particular really is less expensive today than it was in 1960. Spending on food prepared at home dropped from about 14% of after-tax income to about 5% today. Food eaten out also dropped significantly.
I know someone (young Gen X/old Millennial) who was one of eight children. His father was a janitor at a high school. Even so, he has a university education…in fact, he spent 6 years getting a BA. So that janitor income was sufficient for all eight children to get ahead in life. I’m also one of eight and we lived well on my father’s income.
Life was simply more affordable then. Scrimping and saving may have been largely pointless but I do think older generations lived less comfortably and had lower expectations. I think people have higher expectations now. We expect more comfort and luxury … and so many commodities have become luxuries. Coffee used to be inexpensive and plain; now it’s customized and complicated and expensive. From our beauty treatments to shoes to subscriptions to any number of products, things have become more expensive because they’re not functional anymore. They’ve been luxurified, lol.
We also have so much more stuff than older generations — I know it doesn’t seem like it when we look at how much our parents currently have, but it’s true. Our living spaces have gotten larger. We fill them with more things. We treat furniture like a seasonal commodity. We just overconsume. I think we could strip away a lot and still live decent lifestyles. We can even adjust our expectations around things that come with absurd costs. Higher ed is far more affordable when you access it by way of the military, for instance, but most people don’t want to do that. Housing is more affordable when we live in smaller spaces, too.
I don't want to say that everyone is way overthinking this because there are many thoughtful comments to this thought provoking post. But honestly, just save and save aggressively. Actually put your money away and don't spend it. Small amounts large amounts as much as possible amounts for as long as possible.
Americans are taught that the pursuit of happiness is what matters and that consumption will help you find it faster. That's the false narrative that you are looking for. Stop consuming so much.
I'm not sure how to answer this question but I have some observations.
First, I was born in the mid-1950s and raised by parents for whom the Depression was very real. I grew up with the idiosyncracies common to that generation -- stockpiling staples, reusing aluminum foil, not replacing bath towels until they were rags and so forth.
By comparison I grew up in much better economic circumstances. We weren't rich but especially since both my parents worked into my early adulthood, we did OK. Same can be said for me during my own career.
The biggest differences I notice between my generation and yours is the reliance on prepared food and delivery services, whether for groceries or meals from local restaurants. As a single working mom I was not much of a cook. My son grew up eating lots of pizza, peanut butter, mac & cheese and other crap, unfortunately. But we didn't eat out all that much.
As I left fulltime work behind I gained an interest in cooking and my partner and I now prepare most of our own meals and shop for them at the grocery store. I didn't realize how much I missed doing that until getting laid up in early May with a fractured ankle. While grateful for Door Dash and Instacart during that time, it felt wonderful to be able to boot-walk my way into Trader Joe's Monday and shop for myself.
By contrast my son and his wife rarely enter a grocery store, relying on Instacart instead. Rather than prepare meals they've frequently used Door Dash to deliver breakfast, lunch or dinner (although they're actively working on curbing that lately to save money). I can't say whether this is true for most 30-somethings but judging by the delivery trucks I see regularly in my neighborhood, a lot of people use these services.
While I do think aspects of this behavior make it harder for your generation to save, I'm not sure it's enough to overcome the structural deficiencies that have a far bigger impact on people's budgets these days. When I went to college, states provided about 60% of the funding for public colleges. It's maybe half that now. There are lots of other reasons why college costs have risen as well.
Then there's the lack of sufficient housing in many areas, both rentals and purchases, which makes finding shelter a lot more expensive. The cost of cars, the cost of fuel -- even adjusted for inflation, many of these things cost more now than they did when I was growing up.
I still think some ideas are evergreen. Whenever possible, don't spend more than you can pay off monthly. Put 10% of every raise into savings or some kind of investment. Take advantage of your employer's retirement savings plans, or make sure to sock away funds as you're able if you're self-employed. And blah blah blan.
I dunno I hardly know anyone who can or is willing to afford to use delivery services very often. Especially among the younger generation. We use Instacart only if we’re really busy. My sister does restaurant delivery a bit more than we do because she has 3 young children, but not that often. The bigger deal is where they bring the groceries out to your car so you don’t have the trouble of 3 little ones in the grocery store.
To the avocado thing... at my grocery store an avocado costs 20 cents more than a bell pepper (the most "frugal" vegetable I could think of off the top of my head lol) so yeah, avocadoes are not bankrupting people or causing them to be unable to afford housing... They're also very good for you! :)
I like what you said about feeding your creativity with nice experiences. I am just coming out of a very lean period in my life in which we often had no more than $25 a week for groceries. But my husband and I would still often spend just a little bit extra for something nice to cheer us up; maybe fancy popsicles on sale or ice cream and fixings to recreate the sundae we had on our honeymoon. Even that little extra treat can make a huge difference in "feeling" poor versus feeling content with your lot in life, even if it's leaner you'd prefer. Yeah maybe we would have saved a few dollars, but it just made things a little more pleasant. And when you're poor, you appreciate every treat that much more :)
"How poor do you have to be to reach the point where things like grocery savings or trimming the electric bill really accumulate into something meaningful?" This could be anywhere from lower middle class to below the poverty line, it all depends largely on how precarious you feel and what your fixed expenses are. Food is one of the few areas where you have at least some control over both what you buy AND what you get. For families right on the edge, if you save $5/week on groceries clipping coupons and buying off brand, every month that's $20 and every year that's $240. $240 is enough to buy some Christmas presents, or maybe your children get a birthday party at a park with their classmates and a cake and some noisemakers. It's not that saving $5 week is a lot, it's that if you get into the mindset and consistently do it, it adds up. And when you don't have much, you get really good at making those few dollars go a long way.
"Did their savings pay off, or was a middle-class life just that much more attainable?" I think it's more the latter than the former, though I would say they are interconnected. I think there was some cultural messaging around thriftiness as a virtue that isn't around now, but (and another commenter said this elsewhere in the thread) there was also less financial flexibility 50 years ago. My grandmother didn't have a Visa, she had a checkbook. Being frugal with electricity and groceries was an insurance against having "too much month left at the end of the money."
It’s all about the invisible scripts people tell themself about money. I think obsessive frugality is more of a personality trait signaling “I can control this” because maybe it didn’t feel like you could control anything else? Especially income. If working doesn’t have a direct effect on income people will be obsessive about avocado toast and coffee money and keeping lights on. At the end of the day, I would always prefer to focus on increasing income versus policing luxury spending. Sorry not sorry but mood lighting and eating out make life worth living for me. I don’t think previous generations had as many opportunities to increase income. They were of a generation that thought it was wise to work for the same company for 40 years, then retire with a pension. That mindset was disastrous for me and my husband as the youngest millennials. I do think every generation thinks the economy and societal conditions are particularly stacked against them. But every generation has the task to see reality as it is in their lifetime and find ways to rise above and succeed.
There is something to this. Food costs (both for home consumption and restaurants) have dropped massively since the 1950s and the complete subsidised industrialisation of agriculture. We grow rice in Australia for export to Asia… in a country that has one of the lowest annual rainfalls. And we grow both rice and cotton where land is ‘cheap’ out the back of Bourke in semi-arid conditions thanks to a fragile river irrigation rights subsidised by the Government. Careful grocery budgeting even into the 1990s could absolutely mean the difference between being able to save more effectively for rainy days/important big expenses and not. These days, no matter how much I cut our grocery bill, it is truely marginal gains that don’t really compensate for the fact that all the other expenses (especially insurances, housing, energy and transport, childcare/education) are much more expensive and much more essential than they were.
The point about how much healthcare has increased in both capacity and cost is a good one. We’ve got a mild special needs kid and I’m pretty sure at the turn of the century, there was no speech therapy, occupational therapy, behavioural therapy etc.. available or expected of parents to do, aside from send them into regular school and hope for the best and accept their limitations for kids like mine. We can only afford them because our Federal Government built a scheme for early childhood interventions that covers the cost of these therapies, which requires the providers to do copious amounts of paperwork to justify the needs (on top of the regular economic inflation) and then drives up their costs and so they pass them on to us, who then send the bill back to the Government for reimbursement…
My parents both came from single income families, one a successful pharmacist, very frugal and survived the London Blitz as poor Italian migrants before landing in Australia at 19. The other a physician and medical researcher (also an Italian immigrant) who moved the family from Australia to London to New York and back to Australia in the 1970s pursuing career opportunities. Both lived comfortable, but not extravagant middle class lifestyles. Everyone thought my Grandmother was MAD to buy a dryer in 1981 and pull out the hills hoist clothesline out of the backyard after living in New York. It was a household Health essential to dry your laundry outside in the sun in Australia. Now everyone has dryers and Hills Hoist who made those iconic clothes lines have long gone.
It’s an odd phenomena, understanding what you ‘need’ and what we think we need and what we actually require and how their cost has changed over time.
As a boomer son of depression-era parents, I learned to shop frugally for groceries and also to value lasting quality over price on other essentials. There is still an ingrained psychological reward for saving at the grocery store (“Look, honey, I got $93 worth of groceries for only $47!”) and a false conceit that the reason I own my own home and have a healthy balance in my IRA is that I am a “smart shopper” who prioritized saving over (wasteful) spending. I still have difficulty “splurging” on things I could most definitely afford, partly because I feel a responsibility to maintain a comfortable financial cushion for younger family members (in their 30s & 40s and their kids), most of whom have only been able to save enough for a home purchase by living with us for far longer than previous generation young adults and who still have inadequate health insurance and high student loan debt. And while I have never felt the need to enjoy “affordable” luxuries to compensate for income inequity, I can see how those who worry that they’ll never own their own home or live in a desirable community might derive some satisfaction from dining or dressing like someone who does—although it bothers me no end to see my 18-year-old grandson spend $150 for a designer T-shirt. [Incidentally, my mother, born in Southern California in 1931, was making avocado toast for breakfast in the 1950’s. I remember her keeping the avocados on top of a stack of towels in a kitchen drawer so they wouldn’t bruise.]
One of the things I think people forget is that goods that are more expensive today are quite different than the goods we could purchase 50 years ago. Health care is a perfect example. Before the 1970’s hospitals did not have intensive care units. If you had a heart attack on the street, there wasn’t much they could do other than pick up your carcass and take it to the morgue. Cancer therapies? Cobalt, radiation, and surgery. Chemo was in its infancy. Medications like statins did not exist so managing heart disease wasn’t a thing. There was no bypass surgery, no stents, no valve replacement—heart disease just progressed on its own and people died. Health care was cheaper because the product had vastly fewer features and wasn’t consumed for nearly as long.
Housing—land was cheaper because it was more available. Construction—go look at a house built in 1960 and you would find single pane windows, very little insulation, one outlet per wall, a small kitchen with cabinets made of birch plywood, probably not even a dishwasher or space to install one. Three bedrooms, 1.75 baths, a living room, and a double garage. Maybe 1600 square feet. En suite bathrooms were not a thing, nor were walk in closets. It’s not like you could opt to purchase those things even if you did have money to pay for them—they just were not available unless you paid an architect to design a custom home—and even then the amenities were limited by the buyer/designer’s imaginations, and nobody back then thought you needed an entire room to use as a closet.
Cars—same. No air bags, no catalytic converters, no third row seats, no all wheel drive, no air conditioning or power windows, no speakers. It didn’t cost as much because the bundle of products known as a “car” just wasn’t as elaborate.
Also worth noting the Baumol Effect ("cost disease"):
As capital accumulates and production gets more resource efficient, many things that are still labor constrained become significantly more expensive relative to goods themselves.
So groceries (which are heavily automated a all points in the chain) probably really are a much smaller part of the cost of living than they were two generations ago.
That is a really good point—health care is a great example. All of the treatments and equipment that did not exist 50 years ago require trained technicians to operate/monitor.
For my Mom, who was born in the 30s, it was real trauma. Her mom was extremely frugal. She was crazy frugal - even irrationally so: she would turn off the water heater at night so we would have no hot water in the am.
But I don’t think for either of them it was a current cash question, meaning balancing the monthly budget. It was about saving as much as possible against a future crisis. It was less cost than stability of the economy. Because of the laws passed in the FDR years, our economy became much more stable than it had been, allowing us to be lax about “saving for a rainy day.” But they were a product of the more pure kind of capitalism we are returning to, where crises were real and devastating.
We should also confront the idea that we are profoundly wasteful. As a world leader said (can’t remember who, but years ago), “Americans flush their toilets with drinking water”
I try to be frugal because our consumption, regardless of affordability, will end our civilization.
I agree that the budgeting habit was part of it. My mother did the same, trying to make the weekly paycheck last until the next paycheck. But even she is more likely to use a credit card now if she thinks an unusual purchase is warranted (even if it's buying candy for the grandkids). Money is just less tangible now.
My mom died 20 years ago, so I can’t compare, but what you say is totally reasonable and believable.
"Because of the laws passed in the FDR years, our economy became much more stable than it had been, allowing us to be lax about “saving for a rainy day.” But they were a product of the more pure kind of capitalism we are returning to, where crises were real and devastating."
Brilliant observation!
But there would be costs involved in having two water systems in each house— drinking water and toilet flushing water. I wouldn't want to take a shower in water that would not be safe to drink.
We do it a lot in Australia. All houses are required to have a minimum sized rainwater tank and most newer builds have systems that plumb the rainwater stored in the tanks for non-drinking uses like toilet flushing, garden watering, dishwasher etc. some even go all out and collect and recycle grey water into the garden. The system can switch to town water if the tanks run dry. Most rain water is perfectly safe for any of those applications and we have severe enough droughts routinely to make it worthwhile to put it into building codes for water storage.
... dishwasher? 🤨
Assuming your household is blessed to have a machine… I’ve been the dishwasher and now with 3 1/3 small children, we picked up a free machine from a premature office refit.
Isn't it a problem to clean dishes with water that isn't clean?
Rainwater is actually fine with simple mesh filters to skim out particulates and the odd dead creature that might fall or get washed in. All tanks have a ‘first flush’ that siphons off the water that is the first bit of rain that washes all the crap off the roof before redirecting the rest of the clean water to flow into the tank.
For Australians not on town water (a surprising 20% of the population that lives rural don’t have it) there are kits to further treat the water to make it cleaner than the sky does and add flouride for dental health.
Sounds workable.
It is less about showering in dirty water and more about ludicrous abundance. I don’t shower in puddle water either ;)
My mom was also born in the 30’s and her brother 15 mos prior. My grandma called them “depression babies” and in some ways her frugality never recognized that the depression ended. But my mother sure did — she swore she was not going to raise children that looked like “rag muffins” and we always had new clothes and shoes. Maybe not a lot of either, but good quality. And yes, my younger sisters would wear some of my dresses if they were in good shape, but never hand me down shoes. Mom had a thing about shoes — she told me she saved up to buy me my first pair of shoes and grandma had a fit that mom wasted good money on new when used would have been good enough. I guess they had a huge fight over it. So sometimes the frugal lessons result in something entirely different. My dad was raised the same way and he was constantly turning off lights and yelling at us to shut the door quickly so all the cool air didn’t escape. So the message stuck with him and my parents made an odd couple for sure. Dad was always trying to be thrifty and my mom couldn’t care less. I am going to repeat something that I heard someone else say — my parents weren’t poor; they were broke. And there is a difference! We had a roof over our heads; a car (eventually two!); clothes on our backs; utilities to keep us warm or cool; home cooked meals. What we didn’t have was much left over each month. Rarely ate out (even fast food was expensive for a family); vacations were spent at a relatives’ or camping; movies were occasionally at a theater but mostly at drive-ins. And mom would pop corn before hand and bring along a six pack of Pepsi. When I think about my parents being broke in their early years, it also occurs to me there wasn’t as much to spend their money on, even if they had it. No cell phones; cable; airfare was for rich people as was fancy restaurants. Food was never delivered as it is today — that didn’t even exist. I think people feel broke today but for different reasons. Whereas my mom insisted on new shoes for her daughter, my granddaughter has a plethora of shoes and the “expensive necessity” is high speed internet access, so she can do her homework. Same problem; different reasons.
I've never been particularly rich nor particularly poor. I hate wasting money on things, so I'm fairly frugal, but I also understand that life is short and time is money, so I selectively splurge. Working more is an option, but it's not sustainable, especially as I get older. I prefer to spend my money deliberately on things that I value. I hate seeing it piddle away due to laziness, like buying takeout because I couldn't be bothered to cook, or paying monthly subscription fees on something I don't use because I forgot to cancel it.
But I agree the obsessive focus on tiny purchases is silly. Every personal finance article seems to track how many coffees a person buys, as if this is a moral measuring stick, but they never really question the big things that are draining their income and trapping them in a payday-to-payday existence, or even debt.
The big questions: Are you living the life you really want, or are you living a life you think will impress other people? Are you just blindly following the crowd through some arbitrary stages of life, trying to hit consumerist milestones? Do you really need two vehicles, or would one do? You live near a subway station, do you need a car at all? Do you really need that monster home and a big yard, or would a smaller home do? All those things cause thousands of dollars per month to pour out of your bank account in mortgage fees, insurance payments, maintenance costs, etc. Trying to offset those large expenses with skipped coffees and 20-cent-off coupons is like trying to empty the ocean with a teaspoon.
I dunno, I really desperately need a Downton abbey style library with rich mahogany molding, 2 stories, stained glass, with ladders, secret passageways, etc. but alas it is not to be
Does it make sense psychologically if we think of it as "We can't afford TO THINK OF OURSELVES AS the kind of people who can afford this"? Expressing the anxious practicality (if we buy this now, we'll have to buy all the treats forever, and that *would* be real money) and the resentful class consciousness (we could become like the weak, snobby wastrels of the elite).
I think that explains a lot of MY parents’ behavior. They were little kids during WWII and came of age in the newfound prosperity of the 1950’s. First generation to go to college, etc. They did not experience prewar poverty personally, but grew up with the habits of their parents—adults who had navigated both the Depression and the rationing/scarcity of WWII. They were really kind of insufferable in some ways—-the frugality was a form of virtue signaling. Canning our own fruit vs. buying canned fruit. What was the real savings? I have no idea. Once you pay for the jars, the sugar, the fruit, etc. Maybe back then it was cheaper because groceries were relatively more expensive in the ‘60’s than now.
I do remember it was a lot cheaper then to buy fabric and make clothing—now it is exactly the reverse. Most middle class women were expected to know how to sew simple dresses and skirts, etc.
I’m not sure if that’s the case if you don’t factor in opportunity cost, like if you’re at home already. Fabric isn’t very expensive and a sewing machine is a one time fixed cost.
Garment fabric is really expensive—a simple cotton interlock knit (think t shirt fabric) is $10.49/yard at Joann, a national chain. That’s a sale price—regular price is $14.99 per yard. It takes about 2 yards to make an adult-size short sleeve shirt, so that is $21 for the fabric alone. I can buy a cotton t shirt for far less than $21.
That’s wild
Yeah, I used to sew a lot before WTO opened up cheap clothing imports from Asia—that’s when it flipped. Prior to 2000, it cost about half what you’d spend retail to sew a garment of equivalent quality (fabric, trim, lining, etc.). Now it is almost the reverse, although it is impossible to find really good quality fabrics anymore—and when you can they are $40+ per yard. Nobody sews so there are no good fabric stores—the chains mostly focus on hobby stuff and quilting.
Yeah. As just a little thing, I *never* remember my mom letting us get a soft drink with our dinner if we ate out or got fast food when we were kids. We could have afforded it, of course. And she judges my sister and her husband a little bit because they aren’t concerned with little things like that with their kids.
Part of excessive frugality is a kind of defense mechanism or a way to feel better about others for being “bad with money”
Elizabeth Warren's "The two incomes trap" explains this phenomenon very nicely. TL,DR: while the price of some optional consumer goods went down [she has specific examples backed up by data], the other fixed costs became much higher (education, health care). As a result, skipping the avocado toast does nothing in the long run of a monthly budget, unlike what the current car prices, with their average of almost $50k [or is it median? Either way, unaffordable to most] and resultant four-figure monthly payment :( Quick napkin math shows that one must forgo 2+ $15/each avocado toasts a day to save enough for that $1000 monthly car payment. So no, it's not avocados that broke our budgets.
The avocado toast example is pretty meaningless. The major question is, did you make the toast at home (in which case it might be quite inexpensive)? Or how expensive was the restaurant at which you bought it? How much time and gas did you spend driving to that restaurant?
Ultimately, there is only so much rational computing one can do in a day (how much gas/time/car wear/accident risk, I may be forgetting something) to decide whether to make it or buy it [whatever -it- is] when costs of daycare are crippling and equal to mortgage payment.
This is what is different between times, the expectations of what one [unionized] breadwinner must bring in to feed his family, with wife available to fill in gaps of cooking, childcare etc, vs non-unionized parents both working , with none to pick up the "slack" of making aforementioned avocado toast.
Since I only have myself to worry about, I balance the rational with how much fun. When you have children, you have to ensure their survival and education. The stakes are far higher.
Warren uses conventional consumer finance analysis, which also treats transportation as a fixed cost, or at least as a high fixed floor.
The Two Income Trap does not explain the phenomenon as much as it is also a reflection of this kind of thinking. It was Great Gen that was the first to plan for the all-car suburban future.
I would make an exception for cigarettes these days bc ouch
Quick search - 20% of income spent on food in 1950 vs 10% today
Having the mental habit of "I don't need that slightly pricey thing" is a good hedge against lifestyle creep and the hedonistic treadmill. Had a wise aunt tell me when I was just starting out "the key is to always live on less than you make, significantly less if you can manage it. And remember, the more you make, the more you spend. Be aware of that and proactive against it and you'll never worry about money."
My husband recently got a major promotion and is now making almost 30% more than before and it's a challenge to fight against the "now we can afford _____ " which sure might be a defensible way to spend money but we were doing just fine without ______ before, and buying it interferes with other financial goals we have. "If you make more you spend more."
And "avocado toast" as a meme is about avocado toast *in restaurants* accompanied by a few mimosas which is easily going to cost you $50+ a head even pre-inflation. It's not about how much an avocado and a loaf of bread costs at Food Lion. It's an absurd waste of money for most people to do regularly.
(Also, opportunistic plug for You Need A Budget for anyone interested in experimenting with a different way of managing basic household finances. I budgeted with Excel just fine for a quarter century and decided to try YNAB; it's life-changing for setting a clear picture of priorities and allocations. Make use of the Reddit; it's super helpful.)
As some others have pointed out, food in particular really is less expensive today than it was in 1960. Spending on food prepared at home dropped from about 14% of after-tax income to about 5% today. Food eaten out also dropped significantly.
https://www.ers.usda.gov/amber-waves/2020/november/average-share-of-income-spent-on-food-in-the-united-states-remained-relatively-steady-from-2000-to-2019/
I know someone (young Gen X/old Millennial) who was one of eight children. His father was a janitor at a high school. Even so, he has a university education…in fact, he spent 6 years getting a BA. So that janitor income was sufficient for all eight children to get ahead in life. I’m also one of eight and we lived well on my father’s income.
Life was simply more affordable then. Scrimping and saving may have been largely pointless but I do think older generations lived less comfortably and had lower expectations. I think people have higher expectations now. We expect more comfort and luxury … and so many commodities have become luxuries. Coffee used to be inexpensive and plain; now it’s customized and complicated and expensive. From our beauty treatments to shoes to subscriptions to any number of products, things have become more expensive because they’re not functional anymore. They’ve been luxurified, lol.
We also have so much more stuff than older generations — I know it doesn’t seem like it when we look at how much our parents currently have, but it’s true. Our living spaces have gotten larger. We fill them with more things. We treat furniture like a seasonal commodity. We just overconsume. I think we could strip away a lot and still live decent lifestyles. We can even adjust our expectations around things that come with absurd costs. Higher ed is far more affordable when you access it by way of the military, for instance, but most people don’t want to do that. Housing is more affordable when we live in smaller spaces, too.
I don't want to say that everyone is way overthinking this because there are many thoughtful comments to this thought provoking post. But honestly, just save and save aggressively. Actually put your money away and don't spend it. Small amounts large amounts as much as possible amounts for as long as possible.
Americans are taught that the pursuit of happiness is what matters and that consumption will help you find it faster. That's the false narrative that you are looking for. Stop consuming so much.
I'm not sure how to answer this question but I have some observations.
First, I was born in the mid-1950s and raised by parents for whom the Depression was very real. I grew up with the idiosyncracies common to that generation -- stockpiling staples, reusing aluminum foil, not replacing bath towels until they were rags and so forth.
By comparison I grew up in much better economic circumstances. We weren't rich but especially since both my parents worked into my early adulthood, we did OK. Same can be said for me during my own career.
The biggest differences I notice between my generation and yours is the reliance on prepared food and delivery services, whether for groceries or meals from local restaurants. As a single working mom I was not much of a cook. My son grew up eating lots of pizza, peanut butter, mac & cheese and other crap, unfortunately. But we didn't eat out all that much.
As I left fulltime work behind I gained an interest in cooking and my partner and I now prepare most of our own meals and shop for them at the grocery store. I didn't realize how much I missed doing that until getting laid up in early May with a fractured ankle. While grateful for Door Dash and Instacart during that time, it felt wonderful to be able to boot-walk my way into Trader Joe's Monday and shop for myself.
By contrast my son and his wife rarely enter a grocery store, relying on Instacart instead. Rather than prepare meals they've frequently used Door Dash to deliver breakfast, lunch or dinner (although they're actively working on curbing that lately to save money). I can't say whether this is true for most 30-somethings but judging by the delivery trucks I see regularly in my neighborhood, a lot of people use these services.
While I do think aspects of this behavior make it harder for your generation to save, I'm not sure it's enough to overcome the structural deficiencies that have a far bigger impact on people's budgets these days. When I went to college, states provided about 60% of the funding for public colleges. It's maybe half that now. There are lots of other reasons why college costs have risen as well.
Then there's the lack of sufficient housing in many areas, both rentals and purchases, which makes finding shelter a lot more expensive. The cost of cars, the cost of fuel -- even adjusted for inflation, many of these things cost more now than they did when I was growing up.
I still think some ideas are evergreen. Whenever possible, don't spend more than you can pay off monthly. Put 10% of every raise into savings or some kind of investment. Take advantage of your employer's retirement savings plans, or make sure to sock away funds as you're able if you're self-employed. And blah blah blan.
Precisely. Nothing new or revolutionary about saving. Just do it and do it aggressively.
I dunno I hardly know anyone who can or is willing to afford to use delivery services very often. Especially among the younger generation. We use Instacart only if we’re really busy. My sister does restaurant delivery a bit more than we do because she has 3 young children, but not that often. The bigger deal is where they bring the groceries out to your car so you don’t have the trouble of 3 little ones in the grocery store.
To the avocado thing... at my grocery store an avocado costs 20 cents more than a bell pepper (the most "frugal" vegetable I could think of off the top of my head lol) so yeah, avocadoes are not bankrupting people or causing them to be unable to afford housing... They're also very good for you! :)
I like what you said about feeding your creativity with nice experiences. I am just coming out of a very lean period in my life in which we often had no more than $25 a week for groceries. But my husband and I would still often spend just a little bit extra for something nice to cheer us up; maybe fancy popsicles on sale or ice cream and fixings to recreate the sundae we had on our honeymoon. Even that little extra treat can make a huge difference in "feeling" poor versus feeling content with your lot in life, even if it's leaner you'd prefer. Yeah maybe we would have saved a few dollars, but it just made things a little more pleasant. And when you're poor, you appreciate every treat that much more :)
"How poor do you have to be to reach the point where things like grocery savings or trimming the electric bill really accumulate into something meaningful?" This could be anywhere from lower middle class to below the poverty line, it all depends largely on how precarious you feel and what your fixed expenses are. Food is one of the few areas where you have at least some control over both what you buy AND what you get. For families right on the edge, if you save $5/week on groceries clipping coupons and buying off brand, every month that's $20 and every year that's $240. $240 is enough to buy some Christmas presents, or maybe your children get a birthday party at a park with their classmates and a cake and some noisemakers. It's not that saving $5 week is a lot, it's that if you get into the mindset and consistently do it, it adds up. And when you don't have much, you get really good at making those few dollars go a long way.
"Did their savings pay off, or was a middle-class life just that much more attainable?" I think it's more the latter than the former, though I would say they are interconnected. I think there was some cultural messaging around thriftiness as a virtue that isn't around now, but (and another commenter said this elsewhere in the thread) there was also less financial flexibility 50 years ago. My grandmother didn't have a Visa, she had a checkbook. Being frugal with electricity and groceries was an insurance against having "too much month left at the end of the money."
It’s all about the invisible scripts people tell themself about money. I think obsessive frugality is more of a personality trait signaling “I can control this” because maybe it didn’t feel like you could control anything else? Especially income. If working doesn’t have a direct effect on income people will be obsessive about avocado toast and coffee money and keeping lights on. At the end of the day, I would always prefer to focus on increasing income versus policing luxury spending. Sorry not sorry but mood lighting and eating out make life worth living for me. I don’t think previous generations had as many opportunities to increase income. They were of a generation that thought it was wise to work for the same company for 40 years, then retire with a pension. That mindset was disastrous for me and my husband as the youngest millennials. I do think every generation thinks the economy and societal conditions are particularly stacked against them. But every generation has the task to see reality as it is in their lifetime and find ways to rise above and succeed.
There is something to this. Food costs (both for home consumption and restaurants) have dropped massively since the 1950s and the complete subsidised industrialisation of agriculture. We grow rice in Australia for export to Asia… in a country that has one of the lowest annual rainfalls. And we grow both rice and cotton where land is ‘cheap’ out the back of Bourke in semi-arid conditions thanks to a fragile river irrigation rights subsidised by the Government. Careful grocery budgeting even into the 1990s could absolutely mean the difference between being able to save more effectively for rainy days/important big expenses and not. These days, no matter how much I cut our grocery bill, it is truely marginal gains that don’t really compensate for the fact that all the other expenses (especially insurances, housing, energy and transport, childcare/education) are much more expensive and much more essential than they were.
The point about how much healthcare has increased in both capacity and cost is a good one. We’ve got a mild special needs kid and I’m pretty sure at the turn of the century, there was no speech therapy, occupational therapy, behavioural therapy etc.. available or expected of parents to do, aside from send them into regular school and hope for the best and accept their limitations for kids like mine. We can only afford them because our Federal Government built a scheme for early childhood interventions that covers the cost of these therapies, which requires the providers to do copious amounts of paperwork to justify the needs (on top of the regular economic inflation) and then drives up their costs and so they pass them on to us, who then send the bill back to the Government for reimbursement…
My parents both came from single income families, one a successful pharmacist, very frugal and survived the London Blitz as poor Italian migrants before landing in Australia at 19. The other a physician and medical researcher (also an Italian immigrant) who moved the family from Australia to London to New York and back to Australia in the 1970s pursuing career opportunities. Both lived comfortable, but not extravagant middle class lifestyles. Everyone thought my Grandmother was MAD to buy a dryer in 1981 and pull out the hills hoist clothesline out of the backyard after living in New York. It was a household Health essential to dry your laundry outside in the sun in Australia. Now everyone has dryers and Hills Hoist who made those iconic clothes lines have long gone.
It’s an odd phenomena, understanding what you ‘need’ and what we think we need and what we actually require and how their cost has changed over time.
As a boomer son of depression-era parents, I learned to shop frugally for groceries and also to value lasting quality over price on other essentials. There is still an ingrained psychological reward for saving at the grocery store (“Look, honey, I got $93 worth of groceries for only $47!”) and a false conceit that the reason I own my own home and have a healthy balance in my IRA is that I am a “smart shopper” who prioritized saving over (wasteful) spending. I still have difficulty “splurging” on things I could most definitely afford, partly because I feel a responsibility to maintain a comfortable financial cushion for younger family members (in their 30s & 40s and their kids), most of whom have only been able to save enough for a home purchase by living with us for far longer than previous generation young adults and who still have inadequate health insurance and high student loan debt. And while I have never felt the need to enjoy “affordable” luxuries to compensate for income inequity, I can see how those who worry that they’ll never own their own home or live in a desirable community might derive some satisfaction from dining or dressing like someone who does—although it bothers me no end to see my 18-year-old grandson spend $150 for a designer T-shirt. [Incidentally, my mother, born in Southern California in 1931, was making avocado toast for breakfast in the 1950’s. I remember her keeping the avocados on top of a stack of towels in a kitchen drawer so they wouldn’t bruise.]