Are we heading into a Great Depression? Probably not. “While today’s situation does not necessarily imply another Great Depression, the economic downturn and those comparisons can encourage us to turn worry into a positive,” said Ethan Ewing of Bills.com. “Consider the lessons learned from the Great Depression and apply some of your grandparents’ financial knowledge to improve your own lot in life.”
Here are 9 lessons from your grandparents:
- Live below your income
Don’t spend more than you earn is an old saw. You can put it into action by withdrawing enough cash each week to cover necessities and putting the credit cards away. A recent study by Visa found that people who pay for their food with a credit card spend 30 percent more than people who pay with cash.
- Focus on your needs, not wants
Understand your income and what it must buy, and account for these needs before spending money on any wants. Food, mortgage payments, utilities and medical care are needs. A new flat-screen TV is not. To avoid confusing the two, put off purchases for at least 24 hours so you can think about them carefully.
- Stay home
In the 1940s, with automobiles slower in those days and air travel not a given, most families seldom traveled on vacation. You can save an average of nearly $2,000 per year by skipping the far-away vacation. Instead, talk, play games, work on a project or watch a movie to relax instead of heading for the airport. Think “staycation.”
- Eat in. In your grandparents’ time, an occasional restaurant meal was a rare treat. Statistics say that people eat out an average of 4.2 meals a week. At an average cost of just $7, that would be $127 per month, or more than $1,500 per year. That’s over $6,000 a year for a family of four.
- Skip the alcohol
In your grandparents’ day, they likely most often drank water, iced tea or coffee. If you choose iced tea instead of a cocktail at home, you’ll save 50 cents to a dollar per day. In a restaurant, the savings could be $5 or more.
- Shun the latte
The children of the Great Depression didn’t slug back lattes, and neither should you if you want to save money. Your best bet is to make a cup of tea or coffee at home and take it with you. If you must drink coffee out, forego the coffeehouse usual for less costly regular cup of Joe.
- Don’t confuse shopping and entertainment
Online or in person, it is all too easy to start adding items to a cart because you are bored. Read a good book (get an old-fashioned library card) or learn a useful hobby instead.
- Keep the old car
A car is transportation, not a fashion statement. Better yet, carpool and cut down on the number of family vehicles to trim transportation costs even more.
- Use it up, wear it out, make it do or do without
This was the Depression era motto – make it yours. Keep jeans past their fashion prime. And do you really need color-coordinated, fabric-lined baskets for your linen closet, or would old boxes work? Keep this mantra in mind and think twice before spending.
If tips like these got your grandparents through the Great Depression, they can get you through the current worrisome times.