1950 vs Today: Have Our Changed Spending Habits Improved Our Lives?

When you think of the 1950s, do you think of an idyllic happy time?  Or do you think of it as an unexciting period in our country’s history?  There have been numerous changes in our society over the last 50+ years.  Many believe these changes have led to an easier and overall better way of life for each of us.

Incomes are up!  But, so is spending.  According to the Bureau of Labor Statistics, spending in America has increased tenfold since 1950.  That increased spending means that not only are Americans saving less, in many cases they are over-extending themselves and living on credit (aka, living in debt).

So, if we are making more money than ever before, why does life suddenly seem so expensive?

Let’s compare….

According to data released by the U.S. Census in 2007, there are three key areas that are draining our wallets.  And each of these four categories has changed dramatically in the last 50+ years.

HOUSING (up 21% since 1950) – In 1950, housing accounted for 22% of a family’s spending.  In 2007, housing costs had risen to 43% of spending.  Why?  Since 1950, the average house size has doubled, now standing around 2,200-2,400 square feet.  In 1950, it was common for houses to have one bathroom, for kids to share bedrooms, and for closets to be rather small (and since people had less ‘stuff’ the small closets seemed ample at the time).  Now, houses have more bathrooms than bedrooms and walk-in closets that are the size of many smaller bedrooms in a 1950’s house!  Many families of today could not imagine raising a family in the house their parents grew up in.  But the truth is, millions of families lived in those houses and survived!

TRANSPORTATION (up 3% since 1950) – In 1950, transportation accounted for 15% of spending.  In 2007, it was up to 18%.  In 1950, it was common for a family to have just one car.  And while cars have actually come down in price (when adjusted for inflation), families now have multiple cars.  And although cars are much more fuel efficient today than they were 50 years ago, Americans are driving many more miles in a year than ever before.

RECREATION, COMMUNICATION AND EDUCATION (up 10% since 1950) – In 1950, this category accounted for 2% of spending.  In 2007, it accounted for 12% of spending.  And while increased educational opportunities are partially responsible for this increase, the bulk of the increase can be attributed to cable, Internet, and phone fees.  Items that we consider a necessarily part of life – cell phones (with data plans!), cable, Internet – were non-existent in 1950.  How much does your house spend each month on cell phones, cable, and Internet?  We think we need those services, but the truth is people have lived without them in the past.  These pricey ‘wants’ have, over time, become perceived ‘needs’ in our society.

As these figures show, the little conveniences that we think make our lives so much improved from our 1950s counterparts are actually making us poorer!  Some say all these pricey improvements mean we are better off.  But are we really better off if we are saving less and going into debt?  You decide!

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