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We parents on average spend five times more on our kids today than we did 25 year ago, and that’s in real dollars. So David Briggs, head of the Good Sense Financial Stewardships Ministry at Willow Creek Community Church in South Barrington, Ill., told me.
Briggs was a finance manager at General Electric for decades before pursuing ministry at Willow Creek, where he now helps people to think wisely and practically about their money. Or tries to.
I like to check in with Briggs on a regular basis, and so he’s frequently a guest on my radio show. Full disclosure — I need his insight every bit as much as my listeners might.
"Five times as much — are you kidding me?" I asked Briggs. He wasn’t kidding. Yes, their "stuff" costs more, iPods, video games, computers, phones, and all that jazz — but five times as much? And should our kids really need all that jazz anyway?
Better put, can today’s parents afford to give our kids five times as much stuff as our parents gave us? The answer is "no."
In fact, according to a recent cover story in The New York Times by Gretchen Morgenson, "just two generations ago, America was a nation of mostly thrifty people living within their means, even setting money aside for unforeseen expenses."
Today, Americans carry $2.56 trillion in consumer debt, up 22 percent (emphasis added) since 2000 alone, according to the Federal Reserve Board. The average household’s credit card debt is $8,565, up almost 15 percent (emphasis added) from 2000."
College debt has also more than doubled since 1995. One reason for that little gem? Sure, college costs have gone way up since then, but the fact remains that many parents find it status-enriching to talk about the crushing expense of the top tier schools their kids attend. That’s even when they really cannot afford the huge costs, and even though the evidence is that in itself getting an undergraduate degree from an expensive "name" school will not make a difference in lifetime earnings for their child. (Though, getting an undergraduate degree — anywhere, and that might include a couple of years at an inexpensive community college — on average brings an enormous difference in lifetime earnings over someone who doesn’t graduate from college.)
Anyway, Briggs said he sees the ramification of Americans’ increased indebtedness first hand in his ministry. The biggest concerns people come to him with in these scary financial times are the fear of losing their jobs, and along with that, not being able to make their credit card payments, a sense of being out of control financially, and being unable to save any money.
So why the change in our personal consumer debt in such a relatively short period of time? Sure, the credit card companies have made us less guilty about debt. Think of the advertisements, as the Times pointed out, like "Life Takes Visa," "Priceless" and on it goes. More ominously, credit card companies and banks thrive so much on fees surrounding loans (which are typically sold off anyway) that whether or not the borrower can pay them back is almost secondary to a lender — meaning a lot of people are getting bank loans and credit cards when they shouldn’t.
But Briggs said, it’s more than that. He’s observed that we Americans, in general, don’t take seriously the need to make lifestyle changes. As Briggs puts it, when folks are short they don’t cut back — "they charge the shortfall to their credit cards."
Moreover, we’ve become a nation that has less and less experience with the notion of "delayed gratification." We sure aren’t teaching our kids when it comes to anything. We parents just hate for our kids to hear the word "no." Hence the five-fold increase in what we spend on them. American parents and children alike are increasingly like Veruca in Willy Wonka and the Chocolate Factory – "I want it NOW Daddy!"
What to do? David Briggs offers some great, practical, doable suggestions for folks, whether it’s about digging ourselves out from under debt, or just learning to handle our money more responsibly and wisely so we stay away from debt.
I’ll continue the conversation with him — and get to the answers — in next week’s column.
(Betsy Hart hosts the "It Takes a Parent" radio show on WYLL-AM 1160 in Chicago. Reach her through betsysblog.com.)