In order to be “normal” - in any society - you have to spend around the same sort of money as your peers do on the same sort of stuff as your peers do, and at the same rate. So when everyone’s wealthier than they used to be, and more and better stuff is cheaper than it used to be, everyone will get completely used to a higher standard of living, and you’ll “have” to have that standard of living.
This is exactly as true now as it was in 1950. In 1950 all the grandparent generation would be going round exclaiming about how young people today took it for granted that they had electricity and a phone in their house, and they went to the shops to buy clothes and jam and bread rather than making these things for themselves “like we always did back in the day” and wasted money on big expensive luxuries like lipstick and cigarettes. Living standards increase, things get cheaper, more people buy them. That’s been going on for a while now.
Also, people are bad at estimating averages, because you either look at what you see online or in the media (skewed in all sorts of ways) or at people around you in your neighborhood (skewed towards “people like you” and probably not at all representative of “normal” or “most people”)
I was born in 1953.
My Dad was a clerk and my mother stayed at home to raise my sister and myself.
We didn’t get a TV until I was 7 years old and we never ever bought a car.
We went on one holiday a year, by train. We stayed in a hostel (in the picturesque Lake District) and went walking each day.
We had one phone (a landline) and of course no computers.
We never ate out.
My parents got me a library card and a chess set, so that took care of my spare time!
Adjusted for inflation, I doubt that phones are any more expensive now than they where in my parent’s day.
I pay $65/month for my 2GB ATT plan with unlimited texts and no long-distance charges.
In 1960, the average cost for the phone itself was $5/month - and long distance was on top of that. In constant dollars, that’s over $40/month. Add in a few long-distance charges and it’s a wash.
Plus, a smartphone is immeasurably more useful.
That said, I do think that my parent’s were much more frugal that most of my generation.
There are way more choices, pursuits and lifestyles available now than there ever were back in the day. When those the generalities largely held true. Today there are so many lifestyle choices and entertainment options, people are pursuing much more varied life arcs than were dreamt of then. So generalities are not going to apply. The assumptions made about a person with a larger home, or new car would hold up much better back then, than now. BECAUSE there are innumerably more options available.
And you’re only looking at the spending part. A cruise? A summer place? Expensive private school? The assumptions that once applied to those ‘lifestyle ‘ enhancements no longer ring true. You don’t see the accompanying other choices they made to afford that thing.
It’s a new world, you’re on the outside of. They didn’t come up in the world you came up in, their values will reflect that. Their financial choices don’t make sense to you, because you’re effectively moving in the headspace of a different time. Just as your choices must have appeared extravagant to your elders once. And some were likely happy for you even if they didn’t fully see them as wise always.
I don’t think it’s that different, I think you’re seeing from the perspective of an elder is all. I think every generation of elders saw a similar view, to be honest.
It’s a wash when you’re talking about one person - but when I was a kid, there were eight-ten people using that single phone. Four kids, my parents, a set of grandparents and sometimes one or both of my uncles.
But as for the OP- some of it is just that the same things cost more .When I was in college, there were still second-run $1 movie theatres and first-run theatres were $6 or so. Now a ticket is somewhere between $11 and $15. Some of it is that we buy different things- I 'm not sure about the ticket prices because I haven’t been to a movie in years but I do have Netflix which costs less per month than tickets for my husband and I to see one movie.
The issue is that some expenses have gone up and others have gone down compared to the past.
Health care is much more expensive. College is much more expensive (and more necessary). People have daycare because both parents work. Taxes are more regressive. People have to save more for retirement now that pensions are gone.
Other things like food, cars, electronics, etc. are much cheaper. I once bought a $40 speaker system that sounded better than a $600 set a friend had several decades ago.
Also TVs and phones aren’t that much money. You can buy into multiple streaming services for $30/month (even less if you share accounts with someone, which tons of people do). A phone is maybe $50/month. So that is $80 a month or less, which is money but its not the end of the world. Especially in an age of $30,000 student loans.
I don’t think the older generations were better, they just had different bills. Back then cars were more expensive and didn’t last long, so families only had one. But health care was cheaper so people were more able to visit a doctor when they were sick than peopel are now.
The one thing that does seem different is housing, houses are much bigger now than decades ago.
My parents were teenagers during the Depression and young marrieds during World War 2. That scarred them in a lot of different ways. By the time I came along, things were more comfortable, but they were still wary about spending on luxuries.
The major thing I can remember is that we spent very little on “entertainment.” Going to a movie was a rare big event. Going out to eat meant going to a cafeteria, which didn’t happen often. Our big splurge was getting fresh doughnuts on Sunday after church.
I think it’s more that modern Americans see themselves as saving less. It’s my gripe about the “paycheck-to-paycheck” complaints - pretty much everyone living check to check would be doing so with twice the money. Saving and investing are seen as hoarding or miserly, and just about everyone goes on about how they want to “live life now” rather than save money for a future they might not see for some unlikely reason. A lot of twenty- and thity-somethings are interested in making more money, but only a small percentage of them think about holding onto some of it.
you have to remember until the 60s there wasn’t a minimum wage either … my grandma used to tell me stories of how you moved around because one place paid 45 cents more a day than their competitor then if something happened and they lowered it …you ate the loss or went job hunting ….
my great grandpa took a part time janitor job at 68 in 1970 for something to do …he was paid more in a week than he earned at 21 working full time he did a lot more things he wanted to do but couldn’t afford …
I do remeber when a lot of things considered necessities today used to be luxuries ……like multiple phone lines and tvs in every room and 2 or 3 new or in good condition cars everyone getting their own bedrooms……
funny thing about electronics …. basic x box one’s and ps4 go for the same amount an Atari 2600 went for and the xbox 1 games are roughly the same
Add A939RX0Q048SBEA (Real GDP per capita) to that graph and your conclusion may be less sanguine. Yes, median income is up 21.5% over the 33-year period, but per capita GDP is up 73% over the same period. Workers are getting a much smaller piece of the pie.
‘So what?’, you say? ‘Their income is up, let them [del]eat cake[/del] talk on Androids if they can’t afford iPhones.’? But this ignores at least three points.
(a) Your data series is for household income. More households are now two-worker compared with 1984, perhaps.
(b) American life has become more stressful. Spouse needs to work, labor unions have been destroyed, expenses like smartphones are increasingly necessary; savings like home-cooked meals are harder to achieve.
(c) It’s human nature that one’s sense of economic well-being is gauged relative to one’s neighbors or fellow citizens.
So: Contrary to that misleading graph of median household income, there is massive on-going transfer of wealth and income from average Americans to the very rich. That is a fact.
On another matter, some Dopers are pointing to the "paper" nature of huge fortunes as a Gotcha. Yes, that paper complicates the analysis, but some of that paper can be and has been traded (via middlemen) for Lamborghinis. Do those Dopers think the Lamborghinis are made out of paper?
ETA: Ooops!! :eek: I got my tabs mixed up and assumed this was the "Let's Kill the Billionaires" thread. Mods: please transfer this post as appropriate. :)
My Grandpa used to make exactly the same complaint about his co-workers 50 years ago; they were on the same wage, but he’d save, while many of the would spend every paycheque every time.
I think the big difference in the UK at least is the change in the wages/house pricing ratio. When my parents (or grandparents) were in their 20s, they each bought a house, on one wage or one-and-a-bit, after saving up for a few years. For my generation, that’s simply not possible; a deposit is more than one years’ gross pay, and it’s rising. To many in their 20s and 30s, there’s no point in trying to save for a house, which is how our parents started off their lives, because the amount you’d need for a deposit is rising almost as fast as it’s possible for many of us to save it.
Instead of saving up for 2-3 years, getting ‘settled’ and then saving for luxuries, younger people prefer to try and improve their job chances, in the hope of getting the big wage later, and not depriving themselves much in the meantime. It doesn’t matter how many avocados we don’t buy, it’s it’s such a tiny fraction of even a deposit. We’re renting month to month, and living month to month. Yeah, most people should probably save more for emergencies, but since when were people good at saving for something with no payoff?
this was on the twitter repost feed of a comic I read I think it goes along with what nuts said above :
In the vacuum left by the loss of reachable life goals, we 80s kids kind of figured: fuck it.
Why the hell should we give up what is good & joyful & rich of the art & accoutrements of childhood in exchange for a yawning grey void? How was that ever considered a fair deal?
The reason my generation still plays in ball pits & reads comic books & plays dress up is that contemporary society has made most of the good parts of adult life financially unreachable: home, family, travel, even theater is $500 a ticket
All that’s left is the crushing despair!
I want to say this.
Do you know why millennials “refuse to grow up”?
Because we finally figured out that the whole idea is bullshit designed to suppress human joy enough to keep them grinding for an uncaring company for 50 years in unhappy marriages until death is a mercy.
This is my near-constant rant, and I can (barely) resist getting on my soapbox when finances are discussed. For most middle class folks in the west, you can get by on a lot less and live a less stressful life. I understand people are competitive and want to “show off” with their stuff, but why do they always try to compete in the league above their income? This makes no sense. If it’s all relative and you want to be a big fish, why not pick a smaller pond? I think I’ve pointed this out before, but the Missus and I live in a house that is less than a fourth of what we qualify for in the mortgage market. Not only are we less at risk in an uncertain economy, we have way more money than our peers.
I think the OP is correct, most people are more comfortable blowing money on things and going into excessive debt nowadays.
Scott Alexander at Slate Star Codex has a fascinating essay about Cost Disease and how it’s affecting our lives. A little long, but well worth the read imo.
Throughout our adult lives, we consistently spent money where we wanted to - and were complete cheap-asses on areas that weren’t important to us. For example, my wife is really good at sewing and decorating, such that our homes always “appeared” as tho more money was spent on them than actually was. And she was able to make/repair clothing, draperies, etc.
A couple of examples:
-I drink A LOT of coffee, but I bet I can count on 10 fingers the number of times I bought coffee at Starbucks. Always was part of a “coffee club” at work.
-I bring my lunch every day - doubt I averaged eating lunch out 3-4x/year over my 30+ working years.
-My wife and I eat out very infrequently. Starting to do so more now w/ the kids out of the house, but it still isn’t important to me. W/ 3 kids, the big “dining out” experience was Denny’s.
-We were fortunate that my wife’s family has a vacation cabin. VERY rough - essentially camping indoors. But the cost of vacations was basically gas to get there.
-We always lived where I could walk to the commuter train, so we went down to 1 car for about 20 years.
-We never had cable TV until the kids were out of college.
I’m not trying to put myself on a pedestal, but being cheap in ways like that, allowed us to spend money where we wanted - despite living mostly on one government salary. I think that as a result many people - including my children, got the impression that we had more money than we actually did. I don’t know what my kids and their SOs earn, but I’m pretty confident that 2 of the 3 make considerably more than I did when we chose for my wife to stop work after our 3d kid was born.
No question, the cost of housing is a HUGE difference. We bought our first home - a suburban 3-bedroom split-level, for $94k in 1986.
Expectations are always rising. You see that in any discussion of inflation. The people who say costs are really rising faster than ‘govt’ inflation are generally assuming that there shouldn’t be any correction for quality and features of things improving. Gradually increasing value for money is ‘zero inflation’ to them.
Ease of access to credit is an outlet for rising expectations, but then might cause further increases. Because people tend to define their well being comparatively. Same reason that more stratified incomes make people feel poorer when they aren’t really, and also fuel an increase in the perception of what the ‘middle class life’ needs to include.
Your parents would have also spent the better part of their childhood through their young adulthood experiencing the Great Depression and World War II. So being thrifty and making a dollar last would have been firmly ingrained into them.
Generally, yes, I do think people expect to spend more these days. They are constantly being bombarded with images of attractive, affluent people living happy, fun lives. They are also constantly being bombarded with ads telling them that as long as you buy all this stuff, you can have a happy, fulfilling life, just like the people in the images.
Even if, intellectually, you reject those images, I think subconsciously it creates a baseline of what is considered a “normal” lifestyle.
And with social media, there is now a lot more pressure on people to “show off” their lifestyle.
part of the issue is inflation. Many of us on this board grew up with or experienced in our “formative” years (say age 16-26) either high or relatively high inflation. This was true into the early 90s. Since then, inflation has been an academic/political concern. And of course some of our parents went through both the depression and the economic turbulence of the 40s and early 50s. There was a period of relatively stable inflation from the mid-50s to the mid-60s but everyone of that time had memories of earlier times. A lot of discussion gold reserves and trade deficits etc. Anyone in that environment learned to be cautious with money. In my experience (born in early 50s so I was a teen in the late sixties) I never had the idea that I needed to spend now before the prices went up. Inflation wasn’t THAT bad (except in the late 70s for a few years). But inflation meant anything you wanted was going to be expensive and borrowing money was also expensive. So you saved and did without. But you couldn’t save long-term because whatever you needed/wanted was more expensive. Young people of today do not have that experience. someone born in the 80s or 90s has never experienced a period of rapidly rising prices. Sometimes gas prices shot up, but they always fell in a year or two. It changes one’s view of money and saving.