Interesting article at Yahoo Finance: Is Your Spending Immune to ‘Social Contagion’? Laura Rowley takes a look at a new book by entitled Falling Behind: How Rising Inequality Harms the Middle Class by Robert H. Franks.
Here are a few tidbits:
The wealth gap is problematic, Frank argues, because the ultra-rich are shifting the frames of reference that govern spending by the rest of us. “The economist Richard Layard once wrote that in a poor society, a man can tell his wife he loves her by giving her a rose,” Frank wrote me in an email. “But in a rich society he must give a dozen roses. People’s spending patterns are always strongly influenced by local context.”
I do think there is some merit to this line of thinking. Think how many things people in this country consider “needs” that really aren’t needs. In addition, think how television and the internet expose the average American to more and more in this country, making us think that if the rich and powerful have something, we need it, too.
And this:
Even the $10 million coming-of-age parties for children of the super-rich have launched an expenditure cascade, Frank argues. He may have a point. I find myself spending $150 on birthday extravaganzas at gymnastics facilities for 20 kids, when my own childhood parties consisted of a home-baked Betty Crocker cake and rousing games of musical chairs and “drop the clothespin in the milk bottle.”
I’ve read about these big bash birthday parties and they won’t be happening in our home. I remember birthday parties just like Rowley describes and I had fun and turned out just fine. In fact, I distinctly remember drop the clothespin in the bottle and enjoyed it. It was fun! But then I wasn’t raised in such a way to need more and more to stimulate me and keep me happy. It is our intention to raise Caroline in a similar way, which drives all the choices we make from friends to church activities to vacations to schooling.
And lastly:
Personally, one rose is just fine with me, and I truly don’t want Bill Gates‘ five-acre compound unless it comes with free housekeeping (my kids would find a way to despoil all 40,000 square feet in about five minutes). And while I admit to occasional envy of the mansions in the next town, I also know what affording one requires: endless hours of toil on Wall Street or in the corporate skyscrapers that tower over midtown Manhattan’s shadowy canyons. A bigger house means a bigger mortgage, taxes, utilities, maintenance — and less control over my time.
I know I’ve said this before here, but every time I am tempted to be dissatisfied with what we have materially I remind myself that we can have a lot more. All we have to do is work a lot more, spend a lot more time away from home, and see a whole lot less of each other. We’ve made the choice to make do with less. We’ve made the choice to work less and therefore have less.
Most of the time I am happy with those choices. The sacrifices required for a mansion or even a McMansion are not worth it to me. If God should choose to bless us in the years ahead with more, we would welcome it and be very thankful for it. But striving and sacrificing our homelife in order to keep up with the Joneses isn’t worth it.
I think that David and I do a pretty good job of resisting the social contagion. We certainly aren’t completely immune to it and I’m sure we’ll face new issues as we’re raising Caroline. Perhaps it is the freedom that comes from getting older and frankly not caring what other people think. We’ll continue to make the choices that are best for our family, one day at a time. Maybe at some point that will be employment outside the home for one or both of us. But if that does happen it will be because we have decided for ourselves that it is a true need, not because Bill Gates just built a bigger house.
Fascinating article. I will say very honestly that resisting cultural spending is extremely difficult, especially when children are involved. We have made the decision to have our kids attend public school. Due to issues with safety (I’m convinced that academics will come to the student whose parents are involved regardless of a school’s “reputation”) this has pushed us into a wealthier school district. It is not uncommon for our children to be invited to birthday parties that are held in facilities with rental fees in excess of $250. I am adamantly oppossed to spending more than $50 on a child’s birthday party. On the way home from every one of these parties (after they have begged to have their next party there) I go through the exercise with my children of explaining how much the place costs and why we won’t be spending that. I explain that IF I was going to do anything with that kind of money I would add it to their college accounts. We talk about how the point of a birthday party is to share your special day with friends and how that can be done just as easily at home. So far all of our birthday parties have been at home, and I’ve been told numerous times by the kids that it was of the “funnest” birthday parties they’ve been to. FWIW, I know just enough homeschooling/private school parents in this area to know that even if I were homeschooling or sending them to private school that the issues would be much the same.
The birthday parties are just one issue, of course. There are always others…
My children have been to parties with jumping houses, and rented Cinderellas. They have been to Chuck E. Cheese, and giant blow-up playground places.
But when I throw a party, you know, we go to the playground. Or we play games here at home. A couple of times we’ve gone to a movie, but only with a couple of guests. Because I can not keep up with the Jones’. I don’t apologize for it. People can always decline an invitation.
Same with gifts. I appreciate the $25 gift cards and so forth my kids get. But I can’t spend more than $10 on a gift for a child. If that’s not ok, I guess they can disinvite us the next year.
I wrote a similar blog about being “snack mom.” By the time my third son was in Little League, “snack moms” were bringing $80 worth of pizza to the game. That’s half my weekly food budget.
When it was my turn, I made popcorn, brownies, and crystal light lemonade. I brought paper cups for the popcorn and crystal light. As far as I know, the kids were fine with it. I can’t treat the whole team to pizza. I have to remind myself not to apologize.
After my “snack mom” duty, a black single mom approached me and quietly thanked me for taking it down a notch. She said she didn’t know what on earth she was going to do when it came her turn.
This is very interesting. For many years the big thing here was for a parent to have their B’day parties at either Chucky Cheese’s. Then recently there has a been a shift. The parks in our county have become the ‘hot spot’. On any given Saturday you’ll see dozens of kids, families, etc. running around with grills, cakes and games. We are very fortunate to live in a county that has planned green space, and tons of parks with water, trails, biking trails, etc. It makes it very easy to have those great B’Day parties!
It used to be good enough to have a home phone and an answering machine. Now we are called “Amish” for not having cell phones and being constantly available.
I can relate to this story. For all but the first few months of our nearly 33 years of marriage, we have been a one income family. Because of that choice, other choices have followed.
For most of the first 25 years or so, we had only one car which my husband took to work so I that limited the number of things we actually did during the day. There were periods of time where we did have a second car or I took my husband to work and picked him up at the end of the day but it was rare.
We also bought our home when there was a HUGE housing bust in our town because a factory closed. We paid half what a new car costs today and that was only 23 years ago. We have resisted the urge to upgrade and instead have remodeled and made it just right for our family. I plan to die here, though we may have to live on only the first floor in our “golden years.”
Our birthday parties have always been family parties and the same is true at Christmas time. In years past we have all shopped for each other at Christmas but this year we have decided to make a change. I will be putting everyone’s name into a hat, except for the grandbabies, and I will all draw names for everyone far and near. We have put a limit of $100.00 per person and $30.00 for each family of little ones. I am encouraging them to give a group gift of a game or classic movies that all the children can enjoy. That way, no one family will spend more than $230.00 or the equivalent of homemade gifts. (This is a huge savings when your realize that we have all been shopping for 18 people!) I am excited about this idea and plan to give a “theme” gift for the person I will shop for. (If I get a daughter-in-law, for example, I might give her an Italian cookbook, lasagna pan, Penzee’s spices, etc.) I think this will give all of us an opportunity to really put thought and creativity into our gifts. We have children who buy plane tickets on top of this to spend Christmas with us so we really wanted to be able to lighten the load. I have already told them that I will give them a book list and would prefer used books in good condition…more words for your dollar!
The weird thing to me is that the second most expensive holiday in this country is now Halloween and I am truly amazed at what people spend for it. Truly amazed. We spend about $40.00 because we turn off the lights and go out for pizza to avoid the insanity of my neighborhood!
I really enjoyed thatmom’s comment. Kudos to her for being a nonconformist when it comes to consumerism and keeping up with the Joneses! Also, that is nuts about Halloween. When I was little we spent a good month or two thinking up a costume and how to create it without buying anything and if we absolutely had to have a store bought costume it was always a cheap plastic $$ Store thing. We still had a blast.