Money, says the proverb, makes money. When you have got a little, it is often easy to get more. The great difficulty is to get that little. ~ Adam Smith

Saving money is the new black.  Yes, the painful message of the recession has found a receptive audience.  Stop borrowing and spending!  Hunker down, simplify, live frugally, and save money!  (However, you might want to stuff those savings in your mattress given that another painful message of the past few years has been that banks are not to be trusted!) 

According to a Bloomberg report:

In the recession following a borrowing binge that sent consumer debt to the highest level ever, Americans are shutting their wallets and building their nest eggs at the fastest pace in 15 years.

From 1960 until 1990, households socked away an average of about 9 percent of their after-tax income, government figures show. Americans got out of the habit in the 1990s as they saw their wealth build up in other ways, first through surging stock prices and then soaring home values.

That process has now gone into reverse. U.S. household wealth fell by $1.3 trillion in the first quarter of this year, with net worth for households and nonprofit groups reaching the lowest level since 2004, according to a Fed report. Wealth plunged by a record $4.9 trillion in the last quarter of 2008.

And other stories  report that it is “time to “pay the piper” and time to sober up, say goodbye to immediate gratification and return to fiscal discipline” and advocate a “recession diet” of frugality and savings.  Here’s a little chart of what was in and out in the early days (2007) of the recession:

Saving Borrowing
Cooking at home Eating out
Fixing the old car New car
Staying at home Foreign vacations
20 percent down No down payment
Debit cards Credit cards
Working past 65 Early retirement
Library Bookstore
Tap water Bottled water
BART Bay Bridge
Patching Remodeling
Public park Theme park
Eyeglasses Lasik surgery
Poker night Weekend in Vegas
Brewing coffee at home Starbucks
Flying coach Flying first class

Source: Chronicle research,

This was the first line of defense when we were just beginning to feel the pinch of the recession and I’ll bet most of you have been tightening your belts and keeping a grip on your wallets for the past year or two.   It’s getting old, isn’t it?

But now we’re told that there is light at the end of the tunnel, economic indicators that demonstrate the recovery has begun.  So will this new frugality and fiscal responsibility last?  Will we turn our backs on the credit industry with its outrageous fees and interest rates and seductive marketing and save until we can afford that coveted purchase?  Or are we so weary of pinching pennies that we are willing to pretend that this recession never happened and resume our profligate ways? Have we learned our lesson?

According to a recent article in the NY Times, the rich are beginning to book luxury vacations again and orders for private jets are up.  Even Middle America is willing to do its best to jump start the economy with a little spending.  According to a recent report, many consumers will put their tax refund towards big ticket items rather than stuffing that windfall into their mattress.  Those planning to splurge still make up a minority of people getting a tax refund, according to the survey, but the numbers are growing. About 12.5 percent of people getting a refund expect to make a major purchase. That is up from 10 percent last year.

Consumers are simply tired of living relatively aus­tere lives, NRF executives said.

“A little bit of ‘free money’ will go a long way for Ameri­cans this year,” Tracy Mul­lin, president and CEO, said in a release announcing the survey results.

“Retailers planning spe­cial promotions over the next few months may find that shoppers are a bit more receptive to opening up their wallets than they have been for the past year.”

So what’s it to be?  Save or spend?  Or, for some of us neither!  That is, we can’t even think about splurging on a big ticket item, nor do we have enough money to make saving seem worthwhile.  Yes, I know I need to save; I have car insurance due in June, and other expenses (oil change, root canal, floor repairs, a new battery to run our water heater, oh, let’s not make a list!) that I will not be able to afford without saving for a while.  I’m committed to saving money, and I have goals for which to save.  In addition to the aforementioned needs, I want to squirrel away every extra penny for a larger trailer, one with bunk beds so each child has a bed to call her or his own.  Even before saving, I know that every extra penny should go to pay my son’s overdue medical bills or to repay the money I owe friends and family, but it is hard to make a $50 payment knowing that at the end of the month the money might be needed for gas or to put food on the table. 

When your basic monthly expenses equal, or frequently exceed your income, it is hard to stash anything aside.  Our windfalls tend to be small and like those other recession weary folk who will spend their tax refund on big ticket items, we (kids especially) are also tired of living austere lives.  If I have an extra $20 it’s easier to say yes to an ice cream treat, or a trip to the $3 movie theater with the kids, than to save it for a ‘dream trailer’ or payment that is not due for 3 months. 

The key to saving money, I’ve decided, is to have money to save! I hope the economic indicators are correct and the recovery is underway.  Spend your money rich folks!  Invest in new developments and businesses!  We still have over 8 million jobs to ‘recover’!