I talked recently about how your grandparents or the generation before were probably not making as much money as you do now, but also had fewer needs, because they were vastly self sufficient. They grew their own food, built part or all of their house, sew their clothes, and so on.
As a result, they were able to save a large part of their income, and if they had borrowed for a house, pay it off in less than 10 years.
There is now a disproportion between the value you produce at your job, and what you can buy. For example, in my village, people still grow their own corn, as part of their base diet. They need a patch of land to grow the corn, which they own or rent for the season, then they go sow, supervise, harvest, and dry the corn. Eventually, they pluck it so they can store it for the year, and feed themselves and their animals. They eat tortilla corn for all three daily meals, and their chickens and pigs eat corn too, so you would think it makes sense to grow your corn. Except corn, plucked and dried, is worth $0.12 a pound.
An unskilled worker earns $8 a day. He could buy 66 lbs of corn for every day worked. Assuming his family of five eats 5lbs of corn every day, and his animals another 6lbs (enough to feed quite the chicken coop and a few pigs), he would be left with a surplus of 55lbs of corn every day worked.
Growing your own corn does not require that you work every day, but it is time intensive and you are taking the risk that the crop will get bugs, or a natural disaster will reduce it to zero. Working as an unskilled worker to get the 4,000 lbs of corn you need every year would require you to work just over two months. The other 10 months can be spent earning enough for your other expenses, which in my village are very few, most people build a simple house with their bare hands and only have to pay for electricity if they are even plugged to it, $2 for water rates, and the rest is to enhance their diet a bit, buy phone credit and other consumer goods they didn’t need one generation ago.
Which brings me to my point. Today, one hour of your labor buys much more than it used to. Your grandparents had to spend several hours each month to gather, chop, store and dry firewood to cook and heat their house, today, you can work for a couple of hours and have enough to pay your electric bill.
Yet, according to The Telegraph, people born in the 60s and 70s will be worse off than their parents when they retire, unless they receive a big inheritance. That study shows that those people earned more than their parents when they started their careers, so how do you end up worse?
At the age of 30, people born in the 1970s were paid three-quarters more than those born in the 1940s took home at the same stage in their lives.
But the younger generation put away about £60 a week less…
How is that possible? We make more, and we save less, something is wrong there. First, you could blame our laziness. We work less hours than our grandparents used to (in France, the workweek has been reduced to 35 hours, with 5 weeks of holidays as a minimum) and yet when we go home we want to crash on the couch and eat overpriced convenience food. We want bigger houses even though we are having less children. We want an iAnything and new clothes every season when they used to buy make a new costume every 5 years.
Sure, had we never evolved we would still be living in a cave, and some items have become necessities. Who would want to spend 20 hours a week hand washing clothes and dishes when a machine can do that in a fraction of the time? Who can do without a computer when so many jobs and opportunities are being found online? When you can fly across the ocean for a few hundred dollars why not enjoy it, who cares if your grandparents never left the country?
But if you look a bit more closely, there are things you don’t need. Things that are such poor quality they’ll break on the first use. Junk food with so may chemicals your health bill will be through the roof in your 50s if you keep eating them. The yearly car replacement…
You want to aim for the financial stability your grandparents have in their retirement, so try looking at the lifestyle they lived and realize how easy we have it those days, so there is no excuse to send a good chunk of your income into those retirement and investing accounts.
Are you better off than your grandparents? Why or why not?
This post was featured on the Starting from Zero, The Frugal Farmer, My Wealth Desire, thank you!
My wife and I are probably the richest couple within our two families and much, much more wealthy than any of grandparents ever were. However I think the older generation had something that we don’t. Advertising and marketing is a lot different than it was 50-60 years ago. Back then (in the US) you were bombarded with images of new Chevy’s and Coke and that was just about it. You still had big companies offering you pensions and a fair day’s pay for your work. It’s funny to look through old history photos and see people in factories go to work with a suit and hat. Nowadays people spend their money on all kinds of junk they don’t need and wonder why they don’t have any savings or why they live check to check. The game has certainly changed but our generation isn’t doing much about it either.
Sure, even if you wanted the last toys 50 years ago, your options were pretty limited. Now you shop for a laptop and by the time you buy it you already want a newer one. Making smart money choices from early on can put you way ahead of the previous generation since your work buys more convenience, giving you more purchase power but few take advantage of that.
One issue is we are pouring money into all the technological innovations that have occurred during the past 40 years. Plus, credit is much more available now than it was for my grandparents. I recently did an interview with my 100 year old grandfather. One of the things he mentioned was that he never had a credit card…paid cash or used checks for everything. I’m sure buying on credit and going into debt has a lot to do with why those born in the 60s and 70s will be worse off than their parents.
That’s for sure. Not only did they buy less, they also didn’t pay interest on useless items.
I think as a whole our generation is much better off than our grandparents. The advances in the field of medicine alone makes us better off, and that’s not even factoring in everything else that has improved. I know it’s just one small example and we are talking macro-level here, but the survival rate of children with cancer has increased dramatically since the 60s and 70s. We are also getting much closer to brain implants literally making it so that paralyzed people regain function. I think we are much better off.
My grandparents were able to afford a big house for 7 kids on one military salary, which would be almost impossible to achieve those days on the French market. Sure we live longer but digging yourself out of debt for decades or having nothing saved for retirement, which is the case for many households, doesn’t put them ahead of the previous generation.
My grandparents were dirt-poor, so I’m definitely better off than they were. My mom actually grew up in a 2-bedroom house with 7 kids. She shared a bed with her two sisters. It’s weird how expectations change as time goes on…I can’t imagine living like that now!
Neither can I, but I would rather be in a smaller house I can afford than up to my neck with a mortgage. My sister and I shared a room for the first 8 years until my parents could comfortably upgrade.
Good post Pauline! I was talking with my Dad, generally, about this over the weekend and about how my grandparents made much less than we do but they still had all they needed. They set their priorities and, other than their hose, never financed a thing. Essentially, they put their focus not on having more things, but setting themselves up for a better future.
Overall we’re definitely in a much better position then our grandparents. We do however have a more complex lifestyle. Computers, cell phones, Facebook etc. These things all cost us time and money that our grandparents never had to deal with. (At the same time we have all the convenience that goes with them too).
Phones and computers are pretty much basic needs now, but like they would have spent on gardening tools or a good fishing cane to last 20 years, the trick is not to fall into renewing them every season.
Awesome post, Pauline. The main thing I see here is that we simply spend more money. I had one set of rich grandparents, and one set of poor grandparents. The rich set worked hard, saved money, and lived frugally, making value-based spending decisions. They had very few luxuries in their modest home, went out to eat only occasionally, and had modest clothing, etc. They always drove a nice car, though, and did travel two to three times a year. The poor set made okay money, but just never managed it well. They didn’t budget, and piddled it away on stupid little stuff lots of the time. One of the reasons we’re working so hard to change our financial picture now is because of the image I have in my head of my poor grandparents. Their kids constantly had to give them money to help support them, and they spent all of their lives in struggle monetarily. Sweet, sweet people, but not much financial wisdom there.
No one should be a burden to their kids. I can imagine the struggle between wanting to help a parent and knowing the money wouldn’t be put to good use anyway.
Wow, what a great topic idea! I am vastly better off than one set of my grandparents, but probably not as well off as the other set. They all had gardens and whatnot, one grandma sewed (the other did not, my Mom taught herself!), they canned, made their food from scratch and whatnot. They always had vehicles and such though, televisions and the trappings of the day. My great grandparents probably didn’t, the one set that I met were farmers prior to retiring to a pretty comfortable suburban life.
Maybe they had less in savings but they sure were sufficient and able to weather a crisis without resorting to debt. Something we should learn from.
I am definitely better off than both sets of my grandparents but it was because my parents worked harder to give more for their kids and I am working harder to give more to my kid. However, I am almost going in reverse with my son. I want him to think we have less than we do because I want him to have the value of hard work (that me and my parents both gained from not coming from much) and something more to work toward. I think that is how any of us makes a better life for ourselves is hard work and a commitment to living better.
That is a great mindset. My parents did well but took great care in not spoiling us. There was always money for school trips or education but if we wanted fancy items we had to babysit to pay for them.
It depends on when I would compare to my grandparents. Both sides worked hard throughout their lives, but they had low paying jobs for their time. My grandfather on one side was a farmer and was making a lot of money at one point, but that went down when farming started moving away from the area. I would say that I am better off than my grandparents at this point.
Comparing age to age makes it difficult, mostly because the previous generation had more kids. My grandparents already had 7 at my age, if I had to provide for a family of 9 I would probably be in a different position.
Good points. I think we are better off today than our grandparents generation. Now, we have latest technology, mobile, internet, advance medicine and biotechnology. During our generation, we have easy access to credit services and modern wellness services.
Yes, but that comes at a cost, if you put on debt to pay all that.
I think we will probably end up living lives more similar to our grandparents than to or parents – living in a modest home, fixing things when they break, and working most of our lives for causes that are important to us rather than for high pay. Nonetheless, through diligent saving family found out Mr PoP’s grandma was a millionaire when she died, and my gram is living comfortably as she ages, though probably won’t leave a seven digit inheritance to her children.
If she has been saving for 8 decades you may be surprised!
We are better off their our grandparents but I do agree that more and more people are not, even though I doubt they realize it. Obviously as a whole there have been incredible medical and technological advances that benefit us today. But we have lost their principled saving philosophy. We spend every penny they earn, while they tried to spend as few pennies as possible. Of course, thanks to all those technology gains, we are also hammered with ads and great marketing telling us we need to have this or that. We have credit cards so we can live beyond our means when in their generation it was much harder to do.
We do have much more convenience but often don’t realize the cost of it. Having a cool car and an ipad is “living the dream” for many even if that means having no retirement savings.
That’s a tricky subject. Before World War II my grandparents had a great life in Ukraine, my grandfather was a doctor, so he was quite well off. Then they were forced out by the Russians (not much has changed, huh) along with their young daughter (my aunt). After some time in displaced persons camps in Germany they moved to New York where my mother was born. But my grandfather died shortly after, after contracting an infectious disease from the hospital where he worked. So my grandmother was left with no english, no stable income, and two daughters to raise. So I guess I’m better off than them post war, but certainly not pre war.
What a tragic turn of events. Had all things gone well your grandpa would surely have done really well in the US.
My grandma is doing pretty well for herself because of her frugal ways. My grandpa passed away 25 years ago, and she is able to collect his social security and pension. She moved into a condo and paid it off. She also held a managerial job before retiring in her 60s. That said, I’m not sure of her exact worth, but her mentality of hard work and saving is worth following. I think she will be better off than her daughters, though! My aunts love to shop and get newer things, and my mom and dad have been dealing with debt and have not succeeded in putting enough savings away.
Sounds like a savvy woman, I think you may have some good surprises regarding her worth!
I’m way, way better off than my grandparents. As you noted, we have more purchasing power than previous generations had. I’d hazard to guess that things also last longer, in some cases. But the real key is that we save a lot more than our relatives did, and we avoided debt.
I would say things used to last longer, just by visiting my grandparents’ house and seeing a 20 years old washing machine or century old wooden furniture. The craftsmanship of some items could make them last a lifetime.
Even with my debt I am better off than both sets of grandparents. Both sets struggled with poverty at different points in their lives. One set of grandparents struggled for food when they were in the early stages of their marriage. My other grandmother died penniless and relied on her children to pay for many things that her very small Canadian government pension did not cover.
I have debt but I have assets. I am working toward eliminating debt so I am never like my grandmother. My mom used to give her cans of soup and boxes of crackers for Christmas so that she would have enough to eat. I never want to be a burden on my parents.
That is incredibly sad, although in many countries in Asia, Africa, etc. your kids are basically your retirement account. One friend claims it is easier to find a little here and there to feed your kids than save big amounts for the future, and in a way I can understand where he comes from.
It’s hard to say this about our grandparents, but it is very possible that we are richer than they are, because as you mentioned, the money they earned is much less than we earn today.
I would need to check that in real terms, but surely they could buy less stuff than we can today. Not so long ago no one could afford a car.
I think we’re better off in some ways, but maybe not in everything. I think my grandparents and Holly’s could have been related. My Mom’s parents had a tiny house, 6 kids, and almost no money, but they grew, made, or raised everything they needed and never had any debt. My Grandma lived to be 91 years old and didn’t have a bad day in her life until her last few years when dementia set in. I bet in her richest year, she didn’t have $25,000 in the bank ever, let alone any sort of retirement account, but she did own land that made for a decent inheritance for her children. I would not want such a simple life, but if I could be that happy always, that would be a great thing.
Our standard of living is much higher than our grand parents. If people didn’t get caught up in all the consumerism they would be way farther ahead. Unfortunately our culture doesn’t allow it.
I just read another PF book, Stop Getting Ripped Off, and the beginning of the book the author talks about why were worse off, and his argument is that we spend significantly more on housing than we did years ago. It’s either people buying when they can’t afford to buy (like in an urban area) or people buying much more house than they need and they can’t afford it either. The fact that people are spending more than 50% of their take-home income on housing is why young’uns today are going to be broke in retirement.
Wow, this really puts our lives today into perspective! I’m better off than my grandparents because I save money, say no to eating out, and am paying off my mortgage before I’m 35.
My grandparents on both sides of my family did very well financially. They paid cash for their homes in Canada, never owned a vehicle and lived quite comfortably. No, they didn’t travel a lot or pay for extravagant purchases. They were wise with their money which allowed them to feel secure until the day they died.
We have it better than our grandparents did. The only problem is that we “think” we need more than we need. We have been raised by media to think we are not good enough as individuals if we don’t meet a certain level of consumption. One of the learned tenets is that store-bought is better than homemade. It’s too bad because it keeps us from experimenting with new skills that increases our self-sufficiency and decreases our wants. Another learned tenet is that we think we “need” things that are no more than “wants”. These teachings are difficult to undo. It’s unfortunate because I think we are a generation that is less happy as a result. Thank you for your food for thought.
True story: In my grandmother’s day, when there were no credit cards, if you a reasonable family income and reputation, some stores would let you buy goods on account, to be settled up at the end of the month, or whenever. When my grandmother was in her eighties she used to worry that previous store accounts had not been paid and asked my uncle to go down to the shop and make an inquiry as to whether her account was in fact at zero. She was terrified of not getting into heaven if she had an unpaid debts.
All great points. We might be making more per hour, but we are spending money on things that weren’t even around when our grandparents were our age. We “need” to buy so many things to have the standard of living that we think we deserve. We have to sit down and really be honest with ourselves as to what we want.
One issue is that there is so much more opportunity to get your money stuck in things that will hurt you financially such as credit card debt, a too big mortgage or student loan debt. These things weren’t really there back in our grandparents days, so we should all be more vigilant not to let our money get tied up in debt producing activities.
I think I am significantly better off than my grandparents. I work in an industry that didn’t even exist when they entered the work force. I have savings tools at my discretion that that did not have, (401K, IRA, HSA, an easily accessible stock market, the existence of mutual funds, etc.). I have the ability to learn about virtually any subject at no cost, at anytime and any place in the world via the internet and global communications). My grandmother hand washed dishes and clothes, I have machines that do that. While we have new expenses that have been mentioned above, that our grandparents had MUCH less of (advertising, consumer electronics, eating out, giant houses) most of these expenses are voluntary.