Frugality on the Front Page

BusinessWeek has a story The New Age of Frugality

Thrift has gone in and out of style since the founding of the republic. In
the McGuffey Reader of the 19th century, Benjamin Franklin was held up as a
paragon of virtue for his frugal ways. Later, people who lived through the Great
Depression were in some cases marked for life by the experience. Typical of them
is Bernard Handel, an 82-year-old resident of Poughkeepsie, N.Y., who grew up
poor in the Bronx. In the early 1930s, his father's grocery store failed and his
dad couldn't find another job for several years. To this day, even though Handel
became very wealthy, he shops for food with coupons, drives a Honda, and takes
the subway rather than taxis. "I just don't believe in throwing money away," he
says.
Handel's baby-boomer children grew up without psychological scars from the
Depression. And the boomers' children have come of age in an era of abundance,
easy credit, and a taste for luxury. So it's no wonder that the sudden need for
thrift comes as an upsetting shock for many. Some are calling for a massive
public education effort on the level of the anti-drunk-driving and anti-smoking
campaigns that have been so successful. "We want to build a culture that's more
hospitable to thrift, so it's not seen as odd but fostered and nudged along,"
says Barbara Dafoe Whitehead, co-author of For a New Thrift: Confronting the
Debt Culture, a new report from The Institute for American Values, a think
tank.
...As joblessness creeps up, many more Americans will receive their own
crash course in frugality. It has already happened to Ned Penberthy, 53, a
salesman who lives in Pelham, N.Y. He recently got a new job, took a cut in base
pay, and has been living the frugal lifestyle ever since. Penberthy says he's in
it for the long haul—willing to spend more up front to reap savings over the
next several years. He installed expensive but energy-sipping CFL light bulbs in
his house, and replaced some of his appliances with more efficient ones. For
him, every penny counts. For instance, he switched from shaving cream to
a bar of shaving soap. He figures he saves $6 a year that way. "It's not much,
but there's a psychological benefit," he says.
Like a lot of boomers, Penberthy has a nest egg, but many people in their 20s and 30s have
little to fall back on. To get on track, they have to learn the difference between necessities and discretionary spending. "They need to go back to [psychologist Abraham] Maslow's hierarchy of needs—food, clothing, shelter, and transportation," says Kristine E. Miele, a financial planner. She's offering "Lessons for Life" classes, gradually weaning young people off their spending
habits one luxury at a time.
In the past, consumers have gone shopping the moment the sun came out. But this time? Market researchers trying to divine the consumer psyche are picking up signs that attitudes are changing. Booz & Co. recently conducted a survey of nearly 1,000 households. Among other findings, 43% of respondents said they are eating at home more and 25% said they were
cutting spending on hobbies and sports activities. In both cases, most said they'd continue doing so even when the economy improves. Much the way pump prices have prompted many Americans to forsake SUVs for small cars, the collapse of home values and 401(k)s will make consumers think twice before hitting the mall.
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