The Great Recession of 2008 seems to have turned many Americans into lasting coupon-cutters, scrimpers and savers. Consumers dug a debt hole over the past decade from which there’s no easy climb out. This age of frugality seems to be in fashion, and the new normal ushered in by the recession has become the norm. Americans today are even more likely than they were a couple years ago to say that they are saving more and being more frugal. Cost-conscious is now a way of life.
The hard financial times apparently taught many Americans a lesson: hope for the best; prepare for the worst. In a new survey of consumer attitudes (Dec 2014), the global consulting firm McKinsey finds U.S. adults are still worried about losing their jobs (39 percent) and living paycheck-to-paycheck (40 percent), but rather than being frozen in despair, they’re doing something about it – spending less. This new mindset seems to be becoming a bit of a habit. Four in ten Americans say they have trimmed spending in the past 12 months, and even more (55 percent) are looking for ways to save money. How are we cutting back? McKinsey says consumers are using coupons more often, shopping price, looking for deals and buying in bulk. Plus, we’re finding other ways to be frugal.
The biggest change is the American shift in shopping – abstinence, recycling and bargain hunting are the norms. Changes in people’s savings and spending habits formed after the recession are likely to last a lifetime. Discount and dollar stores are increasingly popular as are yard sales and Craigslist. All these new habits have been birthed out of our recent economic strains, and the benefit is that Americans are saving more and going into debt less.
Trends show increasing numbers are shopping online for money-saving deals. Grocery and drug stores are seeing a decline in spending as dollar stores and coupon shopping move back into favor. Warehouse clubs and dollar stores are gaining favor. During the recession, consumers found bargain brands and skipped the higher-priced names in food, most beverages and household products. Now, many say they won’t go back to the name-brand labels. The results show that being frugal is back in fashion. Whether it’s a desire or a necessity, bargain hunting is going to be a big trend for 2015. It is true that cautious spending behavior is the new normal, and it may be here to stay.
Forty-seven percent of respondents in McKinsey’s survey said they were eating out at restaurants less and skipping the takeout orders, too. Americans are cooking at home, eating leftovers and brown-bagging their lunches. Going out has developed into a venture of value. More people are frequenting cost wary establishments, and they are much more aware ahead of time of the costs they will incur. Groupon, Priceline, Overstock.com and Amazon are the new tools of commerce . . . and we don’t buy retail anymore.
It’s a fact: frugal is in fashion. Whether born out of desire or necessity these are the bargain hunting days. Many Americans may never go back to their freewheeling, pre-recession spending habits. More people are delaying purchases, eating more home-cooking and buying bargain brands. Now people exercise more caution with their finances and have learned valuable lessons from the recent lean times regarding savings, debt and investing for their future. Cautious spending behavior is the new normal and is unlikely to change in the near future.
Frugality in everyday life
What factors have people made to become more frugal? There are many ways to be more frugal, here are the most common ones:
- Spending more time looking for deals and discounts before making purchases
- Cutting back on luxury goods
- Eating at home more often
- Maintaining older vehicles
- Conserving energy use
- Cutting down on expensive recreation & hobbies
Since there still is much pessimism about the state of our economy at this time, the conservative approach towards saving and investing more is perhaps the only way we Americans will be able to change our upcoming future. Change is always hard, but investing in one’s own security is a good way to safeguard our futures . . . and frugality is great start.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments may be appropriate for you, consult your financial advisor prior to investing.
Jeffery Masters, is president of Jeffery W. Masters & Associates 954-977-5150. Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Independent Financial Partners, a registered investment advisor. Independent Financial Partners and Jeffery W. Masters & Associates are separate entities’ from LPL Financial – Jeffery.Masters@LPL.com. Jeff is a Locally Endorsed Investment Advisor by Dave Ramsey. Dave Ramsey is not affiliated with LPL Financial