During my entire life the message I have heard from my grandparents, parents my generation and now my kids constantly is how expensive things are and how the price of things keeps going up.
This month I want to challenge that thought and share with you some examples of why I think that way of thinking is a myth.
In the 1970′s I remember my parents purchasing a 26″ RCA Colour TV for $599. Today a 26″ flat screen is $299.
My very first VHS VCR costs $799. I recently purchased a Blu-Ray player for $168.
Microwave ovens use to cost $500 and up. Now you can buy one for as little as $59!
A home telephone bill may have been about $30. Today a home phone can be had for $19 a month. The problem today is, we have 4 cell phones in a home at a total cost of $200 plus.
The average new home being built in Hamilton in the 1970’s was 1500 square feet and cost anywhere from $60,000 to $99,000. The average new home today is between 2000 and 2400 square feet and costs $380,000 and up.
Coloured appliances use to be the thing in the 70′s while now we expect stainless steel appliances, granite counter tops and skylights.
Most families had one car in the 1970’s with no air conditioning and an AM/FM radio if we were lucky. Today, two cars are a common staple with power heated seats, GPS and satellite radio.
When I was growing up things like XBOX, IPad’s, and the internet didn’t exist. We had a $15 transistor radio and a cassette recorder if we were lucky.
You might say it is unfair to compare the 1970’s with current times as our environment and standard of living has changed for the better overall. Yes our standard of living has greatly improved so we have all made great progress in improving our daily lives. We need to reflect and understand that the cost of living may not have necessarily increased but our expectations have. If we want more, we should expect to pay more.
If we were to live our life today like we did in the 70′s we just might be pleasantly surprised how much money we could actually save. The problem is that we don’t want to wait, we want it now.
With the median income after tax for a family living in Ontario in 2009 of $71,540 we all would expect a family living in Hamilton to lead a comfortable life at a reasonable standard of living, so why doesn’t it?
Peer pressure, keeping up with the Jones’s and everything that the expansion of credit has brought to society. We didn’t have access to credit in the 1970′s like we do today. Hopefully the next generation thinks when we come out of this deleveraging. They will see Mom and Dad struggle and figure out it was due to wanting everything now and too much credit without the ability to pay it back. In the 1970’s if you didn’t have the cash you didn’t buy it until you did. Maybe that is the way our parents generation thought because they were children of the depression and they learned to conserve when they were little.
We see our parents who do have wealth but may not staying at fancy hotels or paying lots of money for meals out. It’s just not in them because they understood the differences between needs and wants. Perhaps we are a half generation away from changing people’s behavior.
The worst of the benefit, retirement cuts are still ahead of us. Remember this is the generation that wants it all for free and the one behind it is not going to pay for it while their benefits are cut back. User fees and means tests are still out in front. The medical system is a ticking time bomb that nobody can afford. Class struggles like the student protests in Quebec could rise up again over different issues.
The costs of some goods may be increasing while the cost of others are declining so I think the jury is still out on the cost of living is outpacing our income. What is happing for sure though is the amount of goods we are buying is skyrocketing and many don’t have the means to pay for them.
People don’t embrace change until they are forced to and that takes a crisis first. I am not suggesting you should not have a higher standard of living, just suggesting you try and avoid a crisis by truly understand the long term costs of having it now and paying for it with credit later.