General Goals 1) to be debt free in 3.5 years 2) save lots of money

Friday, September 2, 2011

Spending, Saving and Debt

Ted Rechtshaffen’s article in The Globe and Mail is an insightful piece of writing based on the financial difference between my grandparent’s generation, my parent’s generation and my generation. As I am writing this its pouring rain outside and I realise that I am lucky to be inside even if it means I am at work. But I realise that the rain can easily represent a financial thunderstorm. Ted talks about the difference between the three generations on their financial outlook and money management.

Your grandparents may just have had the following background:
1) They grew up poor.
2) They believed that "a penny saved was a penny earned."
3) They were fearful enough of how quickly things can change that they never overcame their fear of running out of money – no matter how much they had.
4) Debt was their enemy.
5) They never spent much on themselves.

From a financial perspective they have these characteristics:
1) They grew up middle class (or wealthier), with few or no financial crises in their childhood.
2) They believed that a "penny saved won’t make much of a difference."
3) They believe the future will end up OK – so no need to save for a disaster.
4) Debt is OK.
5) They spend a lot on themselves.

My generation:
If I had to guess, your generational characteristics may look like this:
1) You were wealthier in childhood than adulthood.
2) You believed that "a dollar saved is the right thing to do."
3) You were fearful enough of how quickly things can change that you never overcame your fear of running out of money – no matter how much you had.
4) Debt was a necessary evil.
5) You never spent too much on yourselves – because you couldn’t.

Despite many of my generation’s characteristics being a future outlook, I think they resonate very well. I see at lot of myself in these 5 points. I don’t want to have to save everything I make, I would love to spend money on vacations, and such But the reality is I am not convinced that once the Baby Boom generation get though with CPP there will be anything left. How can there be since there will be more people drawing off of CPP then putting in to CPP. And of course debt was and is an undesirable option which I hope to only use for student loans and a mortgage when ever that day comes, the rest I hope I can pay for in cash.
If you haven’t had the change to read his article I strongly recommend doing.

And if you interested in a little more facts around this topic check out “the shallowest generation”.  PS this is a long article but it’s fascinating to see the numbers.

1 comment:

  1. I honestly can see it across the generations, even here where I live in Barbados. Amazing isn't it?

    Thanks for the great links. Will try to read the second one over the weekend.