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Spend Less, Earn More

moneyThere’s an old quote, variously ascribed (though Google suggests it’s by Will Rogers), that goes: The surest way to double your money is to fold it in half and put it in your pocket. Rogers also said people spend too much money they don’t have, buying things they don’t need, to impress people they don’t like. Whether you lose money on a bad investment or waste money on a silly purchase, the effect is the same: you have lost money with little to show for it. It’s as though you never earned the money to begin with. We have discussed the various ways of earning money on past shows. On this week’s show, we discussed how to keep it.

At least since the original consumer credit boom of the 1920s, our culture has used debt to create the illusion of prosperity. Throughout the 20th Century, Americans on average had an extremely low, if not outright negative, savings rate. New appliances, automobiles, and large houses have been staples of the American household for nearly a century. This impulse has, fortunately, weakened since the Great Recession; Americans are now saving and paying off debt at historic rates, and are keeping things like large appliances and automobiles for longer than ever. People are being more financially prudent and conservative than they’ve been in decades.

This trend is not isolated to older generations, either. The after-effects of the Great Recession, which are still being felt today, plus massive levels of student debt have nudged Millennials toward more basic, less flashy lifestyles. They prefer smaller, more practical cars and homes. Most prefer renting to owning, and many live at home with their parents well into their 20s, if not 30s. The younger generations, even more than the older Gen Xers and Baby Boomers, show tendencies toward frugality and thrift.

We can see this financial conservatism translate to political conservatism, as evidenced by the most recent mid-term elections. Regardless of personal politics, everyone should consider the demographic, gender, and racial makeup of the new wave of Republican politicians, which saw a substantial number of young people, women, and minorities elected as Senators and Representatives. This may portend a growing trend of traditionally liberal spenders, such as African-Americans and women, adopting a more conservative approach to spending. Whatever the political consequences of the last election, it’s likely the cultural consequences will be immediate and lasting.

The outcome of the most recent election is only the latest evidence that American culture is shifting toward fiscal prudence. This doesn’t seem to be translating to social conservatism per se, but the last decade has seen American consumption and spending habits trend toward more discipline and less reckless splurging. This will ultimately cause people to feel more secure about their budgets; as they waste less money to poor investments and useless purchases, they’ll realize their earnings power has always been stronger than it’s felt.

 

11-15-2014 Spend Less Earn More

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About Jay Garvens

Standing at the intersection of our local real estate market and the nationwide financial industry, Jay Garvens gives you the complete picture of every story affecting today's mortgage market! From personal finances to the political decisions moving markets, tune in for a weekend dose of straight talk from Colorado's most candid mortgage industry commentator! Honest, unbiased, and always unpredictable, Jay explores every facet of today's mortgage industry with an approach that's refreshingly blunt and enormously entertaining!

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