Americans Change in Spending Habits

The "new frugality" sounds like a passing trend, but it looks like America is in for a real cultural shift. MoneyWatch.com editor-in-chief Eric Schurenberg explains the changes in store for us.

Americans Change in Spending Habits Spending is out, saving is in. But is frugality just this year’s dietary fad? Or have we, like the generation that grew up in a great depression has been truly altered by economic trauma. The answer seems to be, yes you probably have. For one thing, we’re likely to be better financial citizens at least, for a while now. Top investor Jeremy Grant then foresees, seven lean years of frugality and debt payment for the US consumer. The real test, will come when the markets start to rebound since in the past, we’ve tended to spend more when our assets went up. Maybe this time we won’t trust that paper wealth quite as much. Another change, we borrow a lot less. The great depression gave borrowing to speculate in stocks a bad name. From now on, you’ll consider it erratic and irresponsible to do the same in real estate. A third change, we’ll we redefine our concept of wealth. This says making $250,000.00 a year is defined by the White House as “wealthy” and the previously unimaginable concept of a trillion dollars, get sought around casually. Better be define “wealthy” for yourself by delineating your life goals, whether its sailing around the world in your 40’s or starting a small cup cake business in your 60s, and then saving enough to reach it. Finally, we may lose our taste for risks. Our favorite card game during the bubble was Texas Hold ‘em Poker. A gambling game played for money in front of TV cameras. The favorite during the great depression was Bridge, a Bridge come back would signal a psychological change that results subtlety over flash and keen play over a winner take all approach. It just might be we’ve had quite enough of that.