Since the start of the recession in December 2007, there has been evidence that Americans have been saving more and paying down their debt. In fact, just recently it was discovered that credit card debt is falling at the fastest rate since 1980. Instead of growing their debt, Americans are growing their savings and do their best to live by solid financial principles. And some think that perhaps the current trend of frugality will be long lasting. I received a press release from First Command Financial Services, Inc., expressing this view:
“This steadily growing trend toward permanent belt tightening is not about getting through the current recession – it’s about the birth of a new way of life,” said Scott Spiker, CEO of First Command Financial Services, Inc. “Americans are discovering a financially healthy lifestyle that doesn’t revolve around consumer spending and the accumulation of goods. They are embracing frugality as a desirable and permanent strategy. In this new frugality, consumers are cutting spending and saving more not just because they have to but because it makes them feel better.”
While I think that many of us are revisiting the basic principles of personal finance, I am not quite as sanguine that the recent trend toward frugality will last. What happens and Americans feel better about their financial health? Will they begin to take a few more financial risks, deciding to spend a little more and save a little less? Another concern is that credit card debt will start to climb again. One thing that we’ve learned is that as the economy picks up, people begin to feel more confident about spending money, and worry less about their financial security.
It would be nice if Americans changed to a frugal lifestyle for good, but I fear that in another 10-15 years we could see a similar cycle repeat itself. What do you think? Is the current frugality trend just a fad? Or is it something that will last longer?