The year is 1950. You’re one of four children in a single-income family in North America. Your father works 45 hours a week at a manufacturing job, earning $4,237 annually. Your mother carefully handles every dollar he brings in, setting aside 10% for savings, 20% for clothing, 30% for food, 4% for charitable giving, and keeping the rest for transportation, gifts, travel, entertainment and other expenditures. Your family recently purchased a new house for $7,500, spending less than two years’ salary on the purchase.
Sixty-five years later, you’re now a parent in a dual-income family earning $94,460 from both salaries combined (more than twice as much as your parents made, if you adjust their income for inflation). You have three children, but manage to spend less than 20% of your budget on food and clothing for the whole family. You manage to put 9% of your income into savings every year, but set aside much less for charitable giving (less than 1%), and spend 50% of what you earn on entertainment and other non-necessities. You recently purchased a new home as well, although it cost more than three and a half years’ salary and will take you more than 25 years to pay off.
How did saving and spending habits change so much in one generation? It seems that, although families make much more than they did 65 years ago (the average annual household income in 1950 would have been $41,511 in 2015 dollars), we have a harder time saving money than we used to. In the 1950s, the average family saved $423 every year ($4,144 in 2015 dollars). While the average Canadian family today saves an annual average of $8,764, recent polls have shown that more than half of Canadians have less than $10,000 in their rainy day fund, and almost one third of Canadians only have enough in their savings account to cover one month’s living expenses.
Perhaps, in order stretch our dollars farther, we should look back to our parents’ and grandparents’ generations, to see how they managed to get so much from so little. Here are a few bits of money saving wisdom from our grandparents’ generation to help guide your budget.
Make Your Food Go Farther
While families in the 1950s spent an average of 30% of their income on food, we can get by with a much smaller food budget today. Thanks to the lower cost of food today, the average North American family only spends around 10 – 20% of their budget on food. And, with some simple money savings tips from our grandparents’ generation, we can reduce that amount even more.
Since food cost so much in the 1950s, people found many ways to make their food budget stretch. For example, many people would line the bottom of their vegetable crisper drawer in the fridge with paper towels, which would absorb moisture and keep vegetables from spoiling.
Families in the 1950s were also much better at dealing with leftovers. Today, it’s estimated that the average family throws out over $1,000 per year in edible food. In order to help reduce this number, the website Love Food Hate Waste has developed several resources such as a portion calculator and a recipe book to help today’s families make the most of their food budget and keep edible food out of our landfills.
Though we now have many more cleaning products than our grandparents did, our grandparents still managed to keep their homes clean, and spend less money in the process. How did they do it?
First off, rather than buying a variety of cleaning products for different purposes, most families would simply rely on one good all-purpose cleaner for most jobs, or better yet, make their own cleaning products. By combining plain white vinegar with a little bit of water in a spray bottle, you can make your own all-purpose cleaner that disinfects just as well as any cleaning product you’d buy at the store.
Another cleaning tip is to use old rags instead of paper towels for scrubbing. Old mismatched socks also make a frugal and functional substitute for feather dusters.
Reduce, Reuse, Repair?
One common money saving tip from our grandparents’ generation is to mend old clothing rather than throwing it out. However, this tip may not be as applicable to our generation as it was to theirs, depending on what sort of clothing you buy.
Here’s why: As the price of clothing has fallen since the 1950s, so has the quality. Many people in the 1950s and before would darn their socks or “turn” their shirt collars (sew them on backwards in order to hide the worn out side) because the cost of buying new clothing was simply too expensive. Today, however, most clothing is made to be disposable, and even after investing time and money into learning how to mend clothing, you may soon find that your mended apparel is once again falling apart (the same idea applies to items like shoes, luggage, and even electronics).
However, if you invest the money into buying high-quality clothing in the first place, you may have more luck applying these mending techniques. By buying clothing that’s meant to last longer, and repairing it rather than throwing it out when it becomes worn, you could save money, and end up with a higher-end wardrobe as well.
Don’t Be Afraid to Ask for a Deal
The shopping world has changed a lot since the 1950s, not just in the items we buy but in where and how we shop. Most of our shopping today is done at big box stores, and is totally devoid of any sense of community. What we’ve gained in convenience, we’ve lost in real human interactions, and these real interactions, in addition to being good for you, can also save you money.
By getting to know the local shopkeepers, our grandparents could trade services in exchange for goods, learn about exclusive deals, and even ask for discounts at the register. Though many of those concepts are difficult to apply in today’s big box economy, keep in mind that it never hurts to ask for deal. While there’s not much chance you’ll get a discount on your regular grocery bill simply by asking the cashier for a discount, you may have more luck with smaller independent retailers or even online stores. If you feel a product is overpriced, or even if you’re spending a good deal of money in one place and feel you should get a discount, go ahead and ask if there’s anything the retailer can do about the price – you may be surprised at the response you get.
Focus on What’s Essential
One of the most significant differences between our grandparents’ budgets and ours is the amount we spend on non-necessities. A study conducted by the U.S. Bureau of Labor Statistics found that families in the 1950s spent an average of 30% of their income on non-necessities – a sharp rise from the previous generation, which spent less than 25% on non-necessities between 1900 and 1940. Now, beginning in the ‘90s and continuing into the 00’s, families have begun to spend 45 - 50% of their budget on non-necessities.
In this table, food, housing, and clothing are termed as “necessities,” and everything that falls outside of those three categories is termed as “non-necessities.” Today’s lifestyle usually requires that you spend money on more things to ensure you can get a job and earn money – things like transportation and higher education. But perhaps by taking a good look at your budget and highlighting which items are your real necessities, you can identify some major categories you can reduce your spending in.
By tapping into the mindset of our grandparents’ generation (the generation famously described by journalist Tom Brokaw as the “greatest generation”), you can see how they managed to stretch every dollar, and live happy, healthy lives on incomes much smaller than what we’re accustomed to today.
Want more money saving tips? Check out the Middleton family’s plan to save $13,780 in one year, or listen to an audio interview with Jackson Middleton on the Sarah Mills show where he dishes out more money saving tips for families.