I’ve started researching my next book, which is about Holistic Personal Finance. Like Build Your Signature Wardrobe, it draws on the wisdom our ancestors developed through Two World Wars and The Great Depression.
I am intrigued in particular about how the attitudes towards household expenditure that I have been reading about have changed. I think they are still relevant for the time we live in now where (if you believe the media) we find ourselves lurching from financial disaster to financial disaster like some crazy financial crises pinball game.
1915 (Ellen Richards)
I confess a great fondness for Mrs Richards, she’s like your cranky old grandmother, and given she died while this edition was being prepared I suppose that’s quite reasonable. For her, living within your means was a moral obligation, and spending more than you earned was the sure sign of a weak mind that relies entirely too much on habit. Much better to think carefully and intentionally about your expenditures, and make them in the pursuit of higher ideals and standards. Without these guiding goals, your character declines rather than advances. Her advice is to pick one area to indulge in but to make sure that you cut back in all others to allow it. She also suggests that you should make short-term sacrifices for the greater long-term good, which is usually your children’s future.
1937 (Marjorie Hillis)
Similarly, Ms Hillis suggests that the problem is that you live according to your dreams, not your income, and because you can’t afford your dreams you feel poverty-stricken and miserable. Unlike Richards, she says you can afford to have what you want, but only if you get a little creative about it. Her recommendation is to choose where to economise and to make a game of it; after all a game of cards with thin slices of beautifully buttered fresh bread on the side is the same whether you are rich or poor! Regardless of what your financial state is you must make room for the beautiful things in life because they are what makes life worth living.
1943 (Laura Baxter and Alpha Latzke)
This book is a high school home economics textbook, but when I read it as part of my wardrobe book research, I was so fascinated by how prescient it was that I wrote a blog post describing Your Responsibilities as a Clothing Shopper. Shopping for clothing is just a small subset of shopping overall, Baxter and Latzke explain that your financial responsibility extends beyond spending only what you can afford to a concern for the people who are making the goods that you are buying, and the impact that your purchases have on society as a whole. They argue that the price should give a fair return to the farmer and a fair wage for the worker but that these are the losers during attempts to cut costs. Failure to consider the effects of your purchasing not only wastes your money but has flow-on effects to the local market and your national economy through lost jobs and reduced quality of available goods.
1999 (Joe Dominguez and Vicki Robin)
Dominguez and Robin argue that your spending should mirror your values and purpose, not an entirely separate sphere of activity. To do this, you have to think for yourself and decide what matters, not rely on what you learned from your family, what others think is important, or what you have always done. They make this plain, by asking you to consider that you are exchanging your life energy for the money that you spend, – and you have a limited amount of that.
So where does that leave us now?
Like all things, the media portrays your individual choice to spend money or not as an all or nothing dichotomy.
Some imply that you should even be spending money that you don’t have to support your economy. It’s a nice idea, but given that the majority of goods available for purchase are not made or grown in the country of sale I’m not entirely sure how buying them benefits your local economy. I’m not convinced that going into debt helps the economy either, I think these things just help a minority of importers and investors.
But at the same time, I don’t think that saving all your money is beneficial either. Though having said that, taking a little short-term hardship to reduce debt will free up more cash in the long-term. Setting aside some money for your future can’t be bad either (I’m convinced I will have no one to rely on in my old age if I don’t take care of it myself).
Like all things, someplace closer to the middle is better. And all of these writers offer insights you can draw against to balance your spending:
- As Richards advises, choose one area to indulge in; either eat really well OR dress really well, not both.
- Follow Hillis’ lead and embrace life in a beautiful house, but keep your household costs as low as you can to compensate, even if that means you have to shut some doors so visitors can’t see the rooms aren’t furnished.
- Take Baxter and Latzke’s advice and do spend money, but spend it where it will benefit the people who live and work in your community. Go to your local farmers market and buy your fresh produce direct from the producer. Or have a nice meal at a local restaurant.
- Be like Dominguez and Robin, and ask yourself if the thing you are looking at purchasing is worth the cost of your life.
Do these tips clarify your thoughts about spending?
Richards, Ellen H. 1915. The Cost of Living as Modified by Sanitary Science. 3rd ed. New York: John Wiley & Sons Inc.
Hillis, Marjorie. 1937. Orchids on Your Budget: Or Live Smartly on What Have You. Great Britain: Virago Press reprint 2009.
Baxter, Laura and Alpha Latzke. 1943. Today’s Clothing. JB Lippincott Company.
Dominguez, Joe and Vicki Robin. 1999. Your Money or Your Life: Transforming your relationship with money and achieving financial independence. Penguin Books.