I came across this on one of my favorite sites this morning, The Oxford Club's Investment U:
Will Frugality Remain?
I tend to agree, that those forced to be frugal will not make it a habit any longer than they have to. I do think some people have been shaken enough to build up large reserves, but how many?
Wednesday, May 20, 2009
Monday, May 4, 2009
How long will the new frugality last?
In talking with my financial advisor on Friday, he said he and his company believe this recession will take longer to get out of than the common wisdom says, based on their belief that people have learned from this crisis and will not go back to their free-spending ways.
Despite my home's, investments' and 401k's low values, I'd like to believe him, but I told him my experience with my own clients in probate and bankruptcy cases says otherwise. I'd really like to see people living within their means, and saving enough to continue living their current lifestyles or better in retirement, and I'll continue trying to convert people to this way of living.
On the other hand, most people have a hard time delaying gratification, so I have to believe that when money's available to them, they'll spend it.
I remember people sewing and mending their own clothes in the 70's, and growing their own alfalfa sprouts and vegetables, and then replacing the vegetable gardens with pools in the 80's. I remember a lot of articles announcing the end of the extravagant 80's during the early 90's recession, yet extravagance came back in style awfully quickly.
At best, I think some peoples' lifestyle deflation changes will become permanent, and that's not a bad result.
Despite my home's, investments' and 401k's low values, I'd like to believe him, but I told him my experience with my own clients in probate and bankruptcy cases says otherwise. I'd really like to see people living within their means, and saving enough to continue living their current lifestyles or better in retirement, and I'll continue trying to convert people to this way of living.
On the other hand, most people have a hard time delaying gratification, so I have to believe that when money's available to them, they'll spend it.
I remember people sewing and mending their own clothes in the 70's, and growing their own alfalfa sprouts and vegetables, and then replacing the vegetable gardens with pools in the 80's. I remember a lot of articles announcing the end of the extravagant 80's during the early 90's recession, yet extravagance came back in style awfully quickly.
At best, I think some peoples' lifestyle deflation changes will become permanent, and that's not a bad result.
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