In 1929, the stock market crashed on what is now known as Black Friday. What ensued was an economic blight riddled with job loss, personal bankruptcies and a decline in the value of currency. Whether or not a repeat of the Great Depression could occur, frugal lessons from that epic moment in history are well worth consideration for anyone who strives toward financial health.
Any financial plan worth its weight in gold will dictate diversification. The Great Depression resulted in huge financial losses to those who had all their eggs in one basket -- namely the stock market. A solid plan for the financial future will spread your wealth over several savings modes. Banks, via the FDIC, will insure accounts up to a limit of $250,000. Accumulated cash should be divided into different accounts and with different banking institutions.
Monitor your money and arm yourself with the knowledge needed to make it grow. A financial planner can guide you and make recommendations, but don't simply funnel the money into investment accounts and close your eyes. Know the rate at which your investments are growing and make adjustments as the market changes.
Science states that if you want to lose weight, consume fewer calories than you burn. Budgeting shares a similar theory. If you want to save money, spend less than you earn. A budget is a road map that guides you to living within your means. Advertising prior to the Great Depression convinced consumers of all the luxuries they couldn't live without. Unfortunately, people bought into it and spent money that would have been better put into savings. Credit buying offers an easy way to purchase items of convenience and prestige, not of necessity. When the financial screws tighten, the credit cards still need to be paid. If you are not earning enough to pay off the debt plus everyday expenses, its simple to do the math that no longer adds up.
Sustainability is the capacity to endure. It's a popular buzzword often used in reference to energy conservation. But when gleaning lessons from the Depression, it refers to so much more. It is about making things last. When making major purchases, put quality over quantity. Buy appliances that are both energy-efficient and sturdy. Paying more for a brand name with a proven reputation can reap bigger savings in the long run. Choose an automobile that doesn't drain your wallet at the pump and that boasts lower maintenance costs and fewer repairs. Buy apparel with a classic design that won't go out of style and in a long-lasting material such as pure cotton or wool.
There's a saying that "you don't know what you've got till its gone." Some people who lived through the Depression lost everything. The lesson learned going forward was to appreciate the things you have instead of continually needing to upgrade. Members of the throw-away society waste perfectly good food, clothing, furniture, electronics and a plethora of other items. If you purchase quality items the first time around, it becomes unnecessary to replace them just because new models are introduced. Each time you are tempted to discard an item that has not outlived its usefulness, take the money you would spend on an upgrade and deposit it into a savings account.
Cindy Phillips began writing feature articles in 2007 with her work appearing in several regional newspapers. With more than 30 years experience in the corporate arena, her business expertise includes all aspects of marketing and management. Phillips earned a Bachelor of Arts in English education from SUNY New Paltz.