by Dana George | Updated July 17, 2021 - First published on March 19, 2020
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One need look no further than the habits of our grandparents for great financial advice.
At least one or two generations of your family lived through the Great Depression. You may have been fortunate enough to hear their stories of struggle and, ultimately, triumph. If not, there is still a great deal to learn from the hard-earned wisdom of generations gone by. Here are some of the lessons that can serve us well:
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Nearly 25% of the American population was unemployed at the peak of the Great Depression. Our grandparents recognized that jobs disappear, homes are foreclosed on, and bankruptcies happen. The less credit they used, the lower the odds they would find themselves in the position of being unable to handle their bills.
Many of our grandparents learned the value of taking on debt only when necessary (a mortgage, for example). Pulling out a credit card to buy a new pair of pants or taking out a personal loan to pay for a fancy vacation simply seemed foolish. If they didn't have cash available to buy something, that meant they could not afford it. And if they really wanted something, they would save for it.
It pays to be very careful when using credit. For example, if you travel and want to take advantage of a credit card with generous travel points, use it only if you pay the balance in full each month. That way, you get the reward without losing money on interest.
Not only will adopting a cash-only philosophy keep you out of unnecessary debt, but it will also give you the opportunity to build a savings account and help secure your future.
Whether it’s knowing how to make repairs around the home, fix a car, or sew a new outfit, having practical skills served two purposes for our grandparents. Being able to do it themselves saved money. But they also had a marketable skill they could use if they ever needed a new source of income.
Take time to learn a new skill, such as cooking, refinishing wood floors, or designing a gorgeous garden. Each is both useful at home and marketable if need be.
We are a throw-away society. We buy stuff we don't need, keep it until we're bored of it or it breaks, and toss it in the trash. Our grandparents would likely have been mortified to see how much we throw away each year. To them, that was money down the drain. Perhaps it was because they paid cash for the things they purchased, or maybe they were careful to buy only what they really needed. Whatever the reason, the generations that came before took care of what they owned and were careful to keep things in good enough shape to pass down to their kids.
Take care of what you already own in order to give it a longer life.
Our grandparents knew that it wasn't a matter of if tough times would come, but when they would arrive. No matter how little they had, they found a way to put resources away for those rainy days. They put money in their savings accounts, building it up a little at a time. They grew food, canned it, and stored it so they would always have something to eat. They saved and reused scraps of fabric and bits of lumber, rather than going out and buying more -- all in preparation for the rainy day they were sure would come.
Create your own emergency fund. Don't be discouraged by the amount you can save. Putting anything away means you will inevitably be in better shape when an emergency arises.
The generations before us lived with their families until they got married, went off to war, or could afford a place of their own. When the Depression hit, several generations lived under one roof, sharing expenses and obligations. They didn't allow their pride to prevent them from living with other people, taking jobs that were "beneath" them, or finding a way to get through the hardest of times.
Don't let your pride dictate how many people you live with or the job you accept. Wait until you are financially ready to move out on your own, and don’t turn down a decent opportunity just because it’s not the job of your dreams.
Maybe our grandparents and great-grandparents were lucky. They didn't have social media and television putting near-constant pressure on them.
We are inundated with advertising and flooded with images of other people living their best lives. Don't buy into any of it. Marketers want you to feel bad enough about your current situation to give them your money. And those people with "perfect" lives on Facebook and Instagram? They took 1,000 less-than-ideal photos in order to share one lovely picture with the world. None of it is reality. Not only is who you are at this moment enough -- it's darn near perfect.
Your life may look very different than the lives of your grandparents. But although circumstances change, being wise with money never goes out of style.
Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. The Ascent's picks of the best online savings accounts can earn you more than 8x the national average savings account rate.
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