Recently, while browsing the interwebs and being productive *sarcasm* I stumbled upon the following meme above.
Have you ever imagined what life would be like if you lived in a different era?
There’s a certain innocence of previous generations that seems lost to us now. For example, the top song in the 1950’s was “That’s Amore,” a song that equates love to “When the moon hits your eye like a big pizza pie.” Try finding lyrics like that in one of today’s top songs. Times sure have changed.
Not only has the innocence been lost, so has the way of life. I’m not saying everything was perfect in the past, but the quote above speaks to a time when most families had a single income and were able to reach financial independence by 60. Children were raised by a parent who spent their days at home. Pension plans were prevalent, and social security was something to rely on for retirement years.
Fast forward to today and that way of life has all but vanished. But the great thing about history is we can learn from it. Instead of fantasizing about the past, let’s compare the differences to how the majority of us are living today.
Throw on your poodle skirt or leather jacket and let’s go back to the 1950’s!
College
Today, most of us get derailed right from the start. A staggering 69% of students from the class of 2018 took on student loans, graduating with an average debt balance of almost $30,000.
And it’s no surprise. The message we’re told is, “If you want to go to college, you’re going to need student loans!”
But here’s a fun fact, student loans weren’t even created until 1958. Granted, college costs have been on the rise, but I feel like we need to readjust our message here.
There was once a time in this country when student loans didn’t even exist. People paid their own way through college. We should take on that same mindset today and avoid (bad) debt like the plague!
Avoiding student loan debt is still doable, and it starts with finding an affordable college. There’s no better place to look than in your home state.
The average cost of an in-state public school was $10,000 in 2019, compared to $37,000 for a private school. It may not be cool or hip to stay in-state and go to your local public university, but it can save you on average over $100,000 over 4 years of college.
Where you received your college degree isn’t going to matter once you enter the work force. I’ve never been disqualified from a job application because of my alma mater.
Most of you reading this are probably already in your working careers, but you can still change the message for future generations.
Go to an in-state public school, get a job while you’re going to school, and you can absolutely get through college debt free.
Cars
Often when I’m scrolling through my Facebook feed, I’ll see a friend’s post: “OMG! Look at the new car I just bought!” Their post is always followed up with tons of likes and comments.
Meanwhile, I’m just sitting over here like…
Did you know over half of all adults today have a car loan? And the average car loan payment for a new car is $551 per month.
I went full nerd mode and mathed up how auto loan debt has increased since 1950. I used data from the Federal Reserve and found that auto loan debt per person has increased by 968%!
Remember how I mentioned we should be avoiding (bad) debt like the plague? But for some reason the majority of us go full blown crazy town when it comes to cars. “Who cares if I don’t have the money to buy it, I want that car now!”
In the 1950’s most people paid for their cars in cash, and you should too.
Housing
Your largest monthly expense is most likely spent on housing.
People tend to have pretty strong opinions about housing; whether it’s better to rent or own. I think it’s important to look at your own location and math it up it for yourself, but I’m a big proponent for buying.
Housing has changed a lot since the 1950’s You may have heard of the term McMansion. That’s because when it comes to housing we’ve gone full McDonald’s and decided we needed to SUPERsize it.
The average size of a home was 983 square feet in 1950. Today the average size of a new home has increased to over 2,500 square feet.
What’s also interesting to note is that the average household size has decreased from 3.35 people per household in 1950 to 2.53 people per household today. Meaning the average square footage per person has increased 340%!
Just like supersizing a McDonald’s double quarter pounder with cheese combo (my personal favorite), taking on an unnecessarily large home mortgage can supersize your debt. Not only are larger homes obviously more expensive, so are the property taxes, costs to insure, and costs to maintain.
In the 1950’s people were able to get by with less, do you really need that 2,500 square foot home to keep up with the Joneses?
Subscriptions
How many subscriptions do you have? Subscriptions are dangerous things because they allow for complacency.
Complacency leads to unknown expenses. Unknown expenses lead to veering off the path of financial independence, and veering off the path of financial independence leads to the dark side.
There are so many things to subscribe to today, it’s ridiculous: internet, cell phone plans, cable, a gym, Netflix, Amazon Prime, presents for your dog (seriously), and the list goes on.
A survey found that people think they spend only $80 per month on subscriptions. But on average, we spend $237 per month on subscriptions, almost 300% more than we think we’re spending! That’s the danger with complacency. Don’t go to the dark side!
I couldn’t find any good stats on subscriptions from the 1950’s, but that’s most likely because most people didn’t have subscriptions. Cable had just been invented in 1948, there was no internet, so no Netflix or Amazon, no cell phones, and gyms didn’t start to become popular until the 1970’s.
Starting a budget is a great way to fend off complacency by tracking your spending and subscriptions every month.
So Tonight We’re Going to Party Like it’s 1949?
“Today 40 hours a week is barely enough to cover rent and food with dual incomes and you’ll likely never retire. That’s the reality of our economy.”
I’ve just highlighted some of the main points of how we are living differently today compared to the past. I could have gone on about how we’ve also changed our spending habits on food, travel, clothing, etc.
The fact is, the majority of American middle-class families can still reach financial independence IF they decide to start living slightly less extravagant lifestyles. The economy hasn’t failed us, we’ve failed ourselves.
It’s all about individual choices, and it’s important to know what your needs are and what your wants are. You can either learn to rule money or money will always rule you. I’d much rather learn to rule money and enjoy a life of financial independence.
So tonight we’re going to party like it’s 1949!
I think you make lots of fair points here about various elements of society drastically increasing in cost (or size, in the case of houses and cars for example!).
There’s a lot of bloat out there.
People spend, as you rightly pointed out, loads of money on cars and other luxuries beyond what they did in the mid-century. I mean, smartphones didn’t even exist and look at how much we spend on them (between their cost, the monthly plan, apps, upgrades, accessories, etc.).
However, I think it’d be important to consider how much of our income, on average, is available for discretionary spending as compared to decades ago. In other words, has society become more efficient in terms of basic needs (food, housing, etc.)? Do those elements represent a smaller proportion of our monthly expenses, in relative terms?
If that’s the case, it’d explain why we have decided to spend more on various parts of life: we have more to spend.
Of course, it seems rare that people didn’t simply consider spending the same (relative) amount and perhaps saving boatloads more so they could… I don’t know… retire early?
Yeah, that’s a good point, but difficult to track.
In the 1950’s the average household income was $3,300, which is equivalent to $36,201 in today’s dollars. Today the average household income is $78,500. Household’s are making more than twice as much today as they did in the 1950’s, which makes sense because a lot of families now have dual income sources, while in the 1950’s, typically one parent would stay at home.
However, consumer spending has increased by over 300% in that time frame.
So households are making more than double what they were, but are also spending more than triple what they were back in the 1950’s.
I don’t think society has become less efficient, I think society is choosing to live lifestyles that they can’t afford.