We are often told that the current financial meltdown is the most serious since the Great Depression. And while that may be true, comparing today’s times to such an awful and demoralizing crisis has the effect of scaring people, thereby making the situation worse. This is the wrong way to react to the situation. Rather than passively absorbing fear and uncertainty, we would do well to remember that some people managed to stay afloat during the Great Depression – and to learn how they did it. In that vein, here are 16 Depression-era money saving tips and how they can be utilized today.
Pay Yourself First
Without a good-sized chunk of money stashed aside, there is literally nothing standing between you and financial disaster. While you may manage to chug along the way things are now, the slightest change (a sudden spike in credit card rates, temporary loss of income, etc.) could send you reeling. That being said, it’s no surprise that paying yourself first by continuing to save was a common trait of people who survived the Great Depression. You should do the same today, no matter how uncomfortable or counter-intuitive it feels at the time.
Only Buy What You Truly Need
Together with regular savings, buying only necessities forms the bedrock of the Depression mentality to surviving economic turmoil. You can bet that when people were jumping out of skyscrapers because their net worth evaporated overnight, the people who held it together were not blowing their money on excesses. Similarly, until you conduct a thorough inventory of your spending habits, methodically eliminate waste and ensure that you are only buying what you truly need to survive, you will not be as fortified from disaster as you could be.
Awaken Your Inner Bargain Hunter
Another defining characteristic of Depression survivors was their relentless spirit of bargain hunting. When money is scarce and the future uncertain, there is simply no excuse for paying full sticker price on any of your purchases. Such times call for a different mentality, one of price comparisons and serious research into where the cheapest prices can be found. Luckily, the Internet makes this task far easier for today’s consumers than Depression-era bargain hunters. A few minutes of research before making any major purchases will usually assure you of getting a better deal.
Avoid Debt Like the Plague
Today’s recession (much like the Depression of the 1930′s) was caused by excessive borrowing and debt. That being the case, it would be utterly foolish to exacerbate the problem by going into debt yourself (especially if you already have outstanding debt in the form of credit cards or loans.) Going into debt during a recession takes you from the frying pan into the fire, exposing you to the full wrath of collections agencies, ruined credit scores, and possibly even bankruptcy. Rather than allowing this to happen, adopt the Depression mentality: see debt as a plague to be avoided at all costs.
Discard Catalogs or Enticing Advertisements
It is well known by psychologists that one’s environment has a great deal of influence on their behavior. Interestingly, a survey of Depression survivors by the Healthcare Council of Illinois revealed that many of those survivors promptly threw away mail-order catalogs and other enticing advertisements as soon they arrived. It was (and still is!) much easier to stay on your chosen path of frugality when you are not constantly surrounded by ads for things you don’t really need. Heed this advice today and you will be less tempted to splurge!
Question Every Expense
Notwithstanding trust fund babies and lottery winners, people who survived the Great Depression didn’t do it by accident. One of their strengths was a refusal to accept any expense without tirelessly scrutinizing it. Only when it was determined that they were spending the least possible amount of money would they rest easy and pay it. You should adopt this same attitude with regard to any kind of services or ongoing fees that you pay, be it for insurance, home security systems, warranties, Internet connections, and even electricity. Haggle, negotiate, and shop around until you know it would be impossible for someone to spend less and still get what you’re getting.
Use Less Energy
One of the familiar stories of the Depression era is homeowners who turned their home thermostats down and bundled up in coats and sweaters around the house. It’s uncomfortable to imagine going to that extreme and no one gets excited about using less of something to save money. That said, there is no faster, more straightforward way to save money so far discovered. Rather than seeing it as a painful sacrifice, make a game out of it. See how much less of everything you can use without making life unbearably worse. You might be surprised at how frugal you can be (and how much you can save) with heating, lights, and gas!
Buy in Bulk – Intelligently
It’s no secret that buying in bulk can save you money by enabling you to take advantage of volume discounts. Unfortunately, it can also be taken too far, such that it actually costs you more money. Without careful discretion, you might wind up buying things you don’t actually need in bulk, because it’s in bulk, rationalizing that after all, you’re “saving money” on it. This completely defeats the purpose of buying in bulk, which is saving money on things you need to buy. Avoid this pitfall by only bulk buying necessities (ie, nutritious food) and not excesses (ie, 50 gallon drums of shampoo.)
Keep or Start a Garden
Cutting down on restaurant meals means eating more meals at a home, but if you have to buy all your food ready-made, you still wont be saving as much as you could be. That’s why many Depression survivors kept backyard gardens to grow fresh fruits and vegetables. While there is still the cost of seeds and maintenance (ie, water costs), this is far cheaper than buying from stores and ensures that food costs are kept to the absolute minimum
Move to Where the Work is
A tragic fact of the Depression is how many people suffered by staying in stagnant areas when they could have (perhaps at a high cost) moved somewhere more prosperous. Don’t make that mistake today! Many of those who came out of the Depression financially intact had the prescience to see that the job outlook at home would only get worse and the courage to move somewhere else. If you have the opportunity to do the same, take advantage of it.
Develop Multiple Income Streams
It wasn’t called the Great Depression for nothing, but the gloom and doom we associate with it overshadows the fact that not everyone was hurting. Amidst all the mass suffering and despair, a small minority of people actually managed to thrive by diversifying and developing multiple income streams. You can do the same! Whether it’s investing (Warren Buffet says to be greedy when everyone else is fearful), starting a business, or picking up a second job, anything you can do to spread your risk across more than one thing will make you safer and more secure.
Spend Less to Entertain Yourself
A hallmark of Depression-era spending habits was spending less to entertain yourself. Rather than spending gobs of money on extravagant nights out on the town, people found joy in life’s simpler and less expensive pursuits – exercise, reading, or enjoying the great outdoors. While you may not be ready to cut all entertainment expenses out of your budget, you can at least buy your thrills wisely. Fly during non-peak times of the year, see matinee showings of movies, and split entertainment costs with friends in a group.
Buying used clothing is an extreme that many are unwilling to consider, regarding it as “going too far” and scoffing at the idea of ever doing it themselves. But the bare, crass fact is that new clothing is expensive, and when times are tough, the difference between spending $50 or $500 for a similar outfit could mean the difference between keeping the lights on or not. Depression survivors bought used clothing without shame, and if you are feeling the crunch, perhaps it’s time to consider following suit.
Don’t Pay Others For What You Can do For Free
While it’s true that nothing is truly “free” (there is the opportunity cost of your time to consider), in recession, it often makes sense to do yourself what you would normally pay others for. This includes everything from haircuts to lawn care to accounting and tax preparation. If you have an abundance of free time, spend it on tasks like these and avoid shelling out money for them.
Make Things Yourself Instead of Buying Them
You would be amazed how far a little ingenuity and resourcefulness will go in preparing your own food, stitching your own clothes, and making other things that you would usually buy. In addition to saving the money you would’ve spent, you will have the satisfaction of using the things you yourself created!
Pretend That You Are Worse Off Than You Are
People who lived through the Great Depression will tell you that your mindset and overall attitude was just as important (if not more so) than the specific money-saving strategies you used. It took a pervasive mentality of penny-pinching and getting as much from what you had as possible. The best way to cultivate this mentality? Just pretend that you’re broke. Even if you are not technically on the brink of financial ruin, pretending that you are will force you to make decisions differently and more prudently than if you assumed a more comfortable state of affairs.
Do you have other money saving/earning tips to get through the recession in tact? If so, please share them in the comments below.