.jpg)
My father was not quite 4 years old when England joined the Second World War. Those were times of sacrifice: food rationing, wartime blackouts and of the Blitz: Germany’s nearly two months of consecutive bombing over London. Here across the pond, it was also the last year of the Great Depression.
Back then, you didn’t have much and what you had, you held on to. This upbringing created a generation of industriousness and thrifty savers: people who pay with cash, don’t spend more than they have and who save for a rainy day. This is the stock from whence I came.
Most of us learn the hard way
Today in American schools, financial education in mostly lacking.
Only 17 states require a personal finance class to graduate high school. Most states do not require an economics course.
And yet, virtually every part of adult life touches money: from opening up a bank account, paying bills, financing an education, managing credit, saving for retirement – all decisions that can have a long-lasting impact.
I was fortunate to learn early about the value of tracking expenses and the importance of a budget. You have to know where your money is going to have any hope of achieving longer-term financial goals. I was taught to live not within my means but beneath them. I learned to save.
I was instilled with the fear of credit card debt and predatory loans. I learned about the importance of protecting my credit and that good credit meant I would have options available to me later on. I was told never to cosign for anyone else and was clear on the fact that no one with my same last name would ever be cosigning on anything for me; that the sheer fact of needing a cosigner or not having cash to pay for something likely meant I couldn’t afford it.
These are the valuable lessons of a generation that have focused on being damned good and ready if a Depression hits again.
Americans spend more with plastic
When it comes to sticking to a budget, the little piece of plastic in your wallet is not your friend. Studies have shown that people are willing to spend as much as 83% more, the “credit card premium”, when they pay with a credit card instead of with cash. As if one is money and one is not.
With credit cards, the boundaries are fuzzier; it hurts less. You get the awesome stuff now with a simple tap or a swipe – what could be easier? But money can very easily evaporate into numerous little transactions that can quickly add up to a long and expensive monthly bill of nothing-to-show-for-it.
Cash has a definite stop. You either have enough or you don’t. The transaction is clear-cut. You spend more with cards because the stop is no longer what’s in your pocket, it’s now about the credit limit.
According to MagnifyMoney, Americans will shell out over $100 billion in credit card interest and fees in 2018. That’s just the money it costs to borrow the money for that handbag. It doesn’t even make a dent in the actual cost of the purchase. The balance and interest grow and feeds like a cancer. Estimates say 40% of active credit card users carry a balance month-to-month rather than paying it off each month. I hope you really love that bag.
As debt in this country grows, savings rates are declining. 34% of Americans live paycheck-to-paycheck with more than half of U.S. adults having less than $1,000 in their savings account. A 2017 Fed report indicated that 25% of American adults have no retirement savings or pension at all.
Now, if your financial plan involves a casino, bookie, a lottery ticket or getting your tape or screenplay into the right person’s hand, I wish you luck. For the rest of us, goals like funding an education, owning a home, building a business, travelling the world, sending a kid to college or retiring without worry takes time to build.
You will never be younger than you are right this very minute and time is your best friend.
Your future self will thank you.
#savings #debt #QueenCash #investing #budget #positivenews #positiveinformation #coronavirusreading #covid19reading #pandemicreading #staypositive #recession #LifeInspiration #savings #GreatDepression #frugality #financialeducation #predatoryloans #financialwellness #UrbanNaturalDesigns #handcraftedartwork #LosAngeles #LAartisan #creditcarddebt #credit #spending #compounding #retirementsavings #MoneyEducationForAll #financialliteracy