Being the saver I am, I am always surprised to meet people who do not believe it’s necessary to set spending guidelines and limits for ourselves and put money aside on a regular basis.
They figure that saving is either for boring people, or it will take care of itself.
Most often, these are affluent people who probably don’t have to worry too much right now in their lives about finances because they are making big salaries that definitely put them in the top 5-10% of wage earners.
Cutting back or budgeting just seems so silly to them. They also make a point of providing their children with every possible indulgence, from expensive gourmet food, to their own expensive smart phones, to lavish vacation trips, etc., etc.
But here’s my concern.
They figure that saving is either for boring people, or it will take care of itself.
Most often, these are affluent people who probably don’t have to worry too much right now in their lives about finances because they are making big salaries that definitely put them in the top 5-10% of wage earners.
Cutting back or budgeting just seems so silly to them. They also make a point of providing their children with every possible indulgence, from expensive gourmet food, to their own expensive smart phones, to lavish vacation trips, etc., etc.
But here’s my concern.
What if these individuals lose their high-paying jobs? Will they have the savings they need to get themselves through what could be an extended – and even permanent – period of un- and under-employment?
And if they do have savings, will it be enough for them to weather a hard economic knock without enduring extraordinary and painful lifestyle downscaling, including the possible loss of their home and community?
What if their children end up struggling to find a job or end up in a very low paying one? Will those young adults be prepared to cope with that dramatic adjustment in lifestyle from what they were accustomed to growing up?
Or are the parents prepared and able to support them indefinitely? That would take very high income and asset levels, for sure. And I won’t even go into the issue of whether that would be the best thing to do for a child even if we could afford to.
And if they do have savings, will it be enough for them to weather a hard economic knock without enduring extraordinary and painful lifestyle downscaling, including the possible loss of their home and community?
What if their children end up struggling to find a job or end up in a very low paying one? Will those young adults be prepared to cope with that dramatic adjustment in lifestyle from what they were accustomed to growing up?
Or are the parents prepared and able to support them indefinitely? That would take very high income and asset levels, for sure. And I won’t even go into the issue of whether that would be the best thing to do for a child even if we could afford to.
These are all valid questions, not to be considered far-fetched or out of the realm of possibilities at all.
We may have extraordinarily short memories in this country, but after the crash of 2008, exactly those scenarios played out in many, many households across the nation. Millions lost their livelihoods and their homes, and many in the job market are still feeling the pain and struggle caused by the economic meltdown.
We saw it happen to very higher earners we knew. And it happened in my own household, where my husband was essentially forced into very early retirement. But we were able to weather it quite easily because we always kept our needs simple and never ratcheted up our lifestyle. We always saved at least 30% of our income – and often more.
Those savings and that frugal lifestyle enabled us to continue paying for the 3 sons still in college even after we lost 75% of our income, and even though we were merely middle class earners to start.
I cannot express the tremendous peace of mind it gave us to know we could still help them get launched in life. It would have weighed very heavily on us if we had not been able to do that because we had made the unwise choice to overindulge them and ourselves when they were growing up.
So my recommendation is to resist the drumbeat of consumerism and excess all around us, both for yourselves and your children.
Avoid the burden of a super sized mortgage for a fancy house with all the so-called "must-haves" and stick to a home that fits comfortably within your budget.
Avoid long-term loans for car purchases, and pay it off within 2-3 years. If you can't do that, then reconsider the purchase. See if you can get by with less car, or maybe even no car.
Whatever you do, say no to all the added bells and whistles on cars these days that add so much to the cost of car ownership.
Skip the meals out and the gourmet specialties. Cook for yourself and your family. You'll be healthier for it, and so will your bottom line.
Take family vacations, but set a budget for them, and keep them simple. Your children will remember times shared more than they will any lavish hotel amenities or cruise ship food.
Instead of buying your children everything they want or that you want them to have, teach them self-sufficiency by making them pay for things on their own. They may gripe and complain and say their friends have it better, but ignore them. At some not too distant point in in their young adult life, they will be glad for the early training in financial responsibility. I know this from experience.
I'm not saying it will be easy to fight the tide of consumerism. Because it won't be. There will be times when it will be downright tough.
But it's worth it. I say that as someone who is now looking back over the years from the other side. I have no regrets at all.
And I don't think you will either.
We may have extraordinarily short memories in this country, but after the crash of 2008, exactly those scenarios played out in many, many households across the nation. Millions lost their livelihoods and their homes, and many in the job market are still feeling the pain and struggle caused by the economic meltdown.
We saw it happen to very higher earners we knew. And it happened in my own household, where my husband was essentially forced into very early retirement. But we were able to weather it quite easily because we always kept our needs simple and never ratcheted up our lifestyle. We always saved at least 30% of our income – and often more.
Those savings and that frugal lifestyle enabled us to continue paying for the 3 sons still in college even after we lost 75% of our income, and even though we were merely middle class earners to start.
I cannot express the tremendous peace of mind it gave us to know we could still help them get launched in life. It would have weighed very heavily on us if we had not been able to do that because we had made the unwise choice to overindulge them and ourselves when they were growing up.
So my recommendation is to resist the drumbeat of consumerism and excess all around us, both for yourselves and your children.
Avoid the burden of a super sized mortgage for a fancy house with all the so-called "must-haves" and stick to a home that fits comfortably within your budget.
Avoid long-term loans for car purchases, and pay it off within 2-3 years. If you can't do that, then reconsider the purchase. See if you can get by with less car, or maybe even no car.
Whatever you do, say no to all the added bells and whistles on cars these days that add so much to the cost of car ownership.
Skip the meals out and the gourmet specialties. Cook for yourself and your family. You'll be healthier for it, and so will your bottom line.
Take family vacations, but set a budget for them, and keep them simple. Your children will remember times shared more than they will any lavish hotel amenities or cruise ship food.
Instead of buying your children everything they want or that you want them to have, teach them self-sufficiency by making them pay for things on their own. They may gripe and complain and say their friends have it better, but ignore them. At some not too distant point in in their young adult life, they will be glad for the early training in financial responsibility. I know this from experience.
I'm not saying it will be easy to fight the tide of consumerism. Because it won't be. There will be times when it will be downright tough.
But it's worth it. I say that as someone who is now looking back over the years from the other side. I have no regrets at all.
And I don't think you will either.
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