Why is it So Hard To Save Money Nowadays?


Why is it So Hard To Save Money Nowadays? The Problem With Thrift

Why is it So Hard To Save Money Nowadays? The Problem With Thrift  - Freeman's Perspective

Thrift is far more important than is commonly understood, and I will be explaining why in a future dispatch, but first we need to dispel the guilt many of us feel about the topic. There is actually a very good reason why it’s so hard to save money nowadays.

I think most of my readers will recognize the feeling I’m referring to: You read great books on success, such as The Richest Man in Babylon, you understand that saving at least 10% of your paycheck is necessary for success and you go out to do it… but obstacles keep getting in your way.

And then you feel bad. You feel that you have failed. You really don’t want to think about thrift any more.

I’m here to tell you that you were far too hard on yourself. It wasn’t your fault. (Okay, if you were out knocking back brews at a bar four times every week, that was your fault, but I don’t think many readers fall into that category.)

Thrift has been systematically strangled over the past century; it is now just barely possible. You’ve been blaming yourself for the sins of others. And remember, most of those success books were written before thrift was dead.

The Simple Reason it’s so Hard to Save Money in Today’s World…

When analyzing the economics of civilizations, the big question is this: Where does the surplus go?

In Greece, for example, surplus was generated by the labor of slaves, and went to the citizen (property owner), who tended to be a very good judge of where and how to use it best. In Western civilization, surplus was generally left in the hands of the person who earned it, who also tended to be a good judge of how best to use it.

Through the past hundred years of a declining Western civilization, the movement of surplus was radically transformed… it was skimmed away, in thicker and thicker layers, to growing governments in capital cities.

The result of this is the current situation: Essentially all surplus is skimmed away from the producer. This is accomplished with direct taxes, such as income taxes, as well as with the hidden tax of inflation, real estate taxes, sales taxes, and dozens of others. (On your phone bill, electric bill, gasoline, liquor, etc.)

In other words, it’s so hard to save money because the government takes so much of it away.

We are so used to this situation that we fail to remember that it was not always so. And that is why we feel guilty about not being able to save money. And we shouldn’t – a large army of state employees work every day to remove our surplus from our hands. Aside from acting especially stupidly, it really isn’t our fault.

How it was in 1890

If you’re like most of us, you had great-grandparents worked hard, saved their money, and improved their situation in life. It was normal to do so in the later 19th Century, even until the first World War. Great-grandfather got ahead; you work just as hard, but you don’t make much progress. And there is good reason for this: When Great-gramps worked hard, he kept the money.

In Grandpa’s day there was no income tax and no sales tax. (The government survived anyway.) There was no social security tax either, and – believe it or not – the streets were never full of starving old people. Families were able to take care of their own.

We have forgotten that it was once possible for an average person to accumulate money. Mechanics, carpenters, shop owners and people like them filled their bank accounts with gold and silver. It was common for people like bakers and carriage builders to make serious business loans and to retire comfortably, living off of their investments.

Making a Fortune

In those days before mass-taxation and fiat currency, young men would go out to make their fortune. (“Fortune” didn’t mean multiple-billions, it meant enough capital for the rest of your life.) Young men would go to where money was being made, work hard, cooperate with similar young men, learn everything they could from the older men, save, invest, learn how to succeed, then return home as a prosperous adult.

Not every young man went out to build a fortune, and some certainly failed, but these activities were not punished at the time – which made them much easier than they are today. Gathering a fortune was common enough that it was built into the mating strategy of the time. Many women would agree to marriage only after the young man had “made something of himself.” This mating strategy was legislated out of existence, which is too bad, because it was generally a far healthier strategy than what developed in its wake.

Here is a graph depicting the difference between you and your great-grandfather:

Why is it So Hard To Save Money Nowadays? The Problem With Thrift

The top line shows how many years of living expenses your great-grandfather would have accumulated as a hard-working young man. The bottom line shows what you can save.

After working for five years, Great-gramps had seven years of living expenses in the bank. Doing the same things, you’d have less than two.

In the modern world, everyone’s fortune is taxed away as it is being formed, and what is saved is eroded by the creation of currency. Very few of us ever get beyond ‘escape velocity’ to accumulate money. In other words, we work all our lives, just to stay more or less even.
With surplus removed from individuals, all investment capital is forced through institutions. Money is not saved, it is obtained from banks. Finance has been centralized and removed from the hands of individuals.

In the 19th Century, productive people made loans; in the 20th Century, their children shuffled into banks and begged for loans.

Grandpa wasn’t really better than you.

The Worst Part

And the worst part of this was mass demoralization: People began to feel morally weak, which generally happened in the name of compassion.

Here’s how the trick worked:

  1. Your money is taken from you before it can accumulate, leaving you with barely enough to live a reasonable life.
  2. You have nothing left to help those who suffer unjustly; not because you don’t work, but because your surplus is continuously skimmed away.
  3. Politicians imply that you are a bad person for not wanting to help the poor.

Not only do the cultural elite make it almost impossible for you to give, but they insult you for it. Then, of course, they spend the money they skimmed from you on armies of government employees, who deliver a small fraction of your money to the poor.

Your great-grandparents were proud to help their friends and neighbors. They felt good about themselves, they felt compassion for others, and they were proud to make the world a better place. Being robbed of this heritage was far worse than the loss of surplus.

So, the question of why money is so hard to save has been answered. Now if only the steps from here were so simple.

Paul Rosenberg

fredburks's picture

I live very simply and I continue to find it easy to save money. For me, it just means rarely going to the movies, not owning a car, and finding ways to enjoy the simple life. I believe anyone can do this. You can always find a way to live on 10% less than you are right now and still enjoy life. Take a beautiful hike in nature. Do some yoga in your home. Go on a picnic with friends. You don't need much money to enjoy life.

With love and warm wishes,

tscout's picture

   because business was going down that much every year! My last year in taos i lived on about 6000 dollars,,,no kidding!  I agree Fred, as my lifestyle changed,,,I was able to cope with the declining economy. But, I still think the point made about taxes is valid, I just don't like being told it isn't possible! I saved over 30 percent of my income in china this year, and I could of done much better! I made 4 times as much in America the last two times I was back, but couldn't save nearly that much. I pay a flat 5 percent on my income here,,,and that's it! You only pay taxes on a house when you buy it or sell it,,,nothing ongoing. But,,,they are learning from the west, so it will get worse.Oh! and I only work 14 hours a week here, so the pay is almost equal to what I made working 40 in america anyways. Most people work much more here though. I had so much time here, I wrote two books,one of which should be published here this summer. I am considering coming back one more time,if I get the 50 percent raise,,,,as it would give me the time to write one more book that is stirring around up there....

    But, all in all,,I agree Fred,,,,,and think that learning to enjoy life without money is a great example of peaceful non-compliance, supporting yourself while learning not to support the many things that keep the "machine" rolling !,,,,l,,,,T

Noa's picture

I'm all for living simply, but the point is that the cost of living keeps increasing as wages stay relatively the same.  Factor in hidden inflation such as food in smaller packaging or invisible taxes like the decreased buying power of the ever-shrinking dollar and you'll see a disturbing trend. 

Basic necessities, like food, keep rising in price.  There's only so much scrimping you can do and still eat.


Year 2008 2009 2010 2011 2012 Realty

House Rent $800.00 $780.00 Aug. $945.00 Aug. $955.00 Aug. $1045.00 New House Buy $238,880 $232,880 Nov. $268,700 Mar. $202,100 Aug. $263,200 Commodities

Gallon Gas Sep. $3.39 Feb. $2.51 Aug. $2.73 Aug. $3.89 Sep. $3.91 KW Hour Elec Nov. 11.03 ¢ Oct. 11.76 ¢ Sep. 11.97 ¢ Aug. 12.35 ¢ Aug. 13.30 ¢ Shopping Basket ** Foods Notes and Comments on Brands and Weights at end of table Loaf Bread Jan. $1.68 Aug. $1.77 Feb. $2.49 Aug. $1.98 Sep. $1.88 Lb Potatoes Nov. 32 ¢ Aug. 55 ¢ Feb. 52 ¢ Aug. 60 ¢ Sep. 42 ¢ Gal Milk $2.65 $2.69 $2.79 Aug. $3.39 Sep. $2.79 Lb Bacon Dec. $2.96 Aug. $3.19 Jan. $3.22 Aug. $3.98 Sep. $4.48 Doz Eggs Apr. $1.29 Aug. $1.34 Jan. $1.37 Aug. $1.25 Sep. $1.54 24 Pack Coke $5.48 $5.98 $6.98 Aug. $6.98 Sep. $6.98 12 Pack Water $1.90 $1.94 Feb. $2.08 Aug. $2.63 Sep. $2.68 Lb Tomatoes 68 ¢ 75 ¢ Feb. 97 ¢ Aug. $1.59 Sep. $1.79 Lb TasteLikeButter $1.90 $1.94 Dec. $2.28 Aug. $2.68 Sep. $2.68 Lg Cornflakes $2.34 $2.68 Dec. $2.98 Aug. $3.50 Sep. $1.98 Frozen Pizza $2.49 $2.49 Dec. $2.90 Aug. $3.00 Sep. $3.33 5 Lb Bag Sugar $2.68 $2.78 Dec. $3.12 Aug. $2.92 Sep. $2.42 5 Lb Bag Flour $1.97 $2.06 Dec. $2.18 Aug. $3.12 Sep. $2.98 Lb Ground Beef $3.68 $3.99 Dec. $3.78 Aug. $3.78 Sep. $4.78 Tide Soap Powder $5.98 $6.98 Dec. $7.97 Aug. $10.55 Sep. $17.97 Folgers Coffee $5.49 $7.98 Dec. $8.78 Aug. $12.98 Sep. $8.98 Lb Green Grapes $1.85 $2.15 Dec. $2.97 Aug. $1.96 Sep. $1.98 Toilet Paper $3.49 $3.49 Dec. $3.98 Aug. $3.98 Sep. $3.96 Chicken Soup $1.89 $1.95 Dec. $2.08 Aug. $2.10 Sep. $1.75 Employment

Wages $40,523 $39,423 Nov. $39,856 Aug. $40,925 NA Unemployment Jan. 5.4% May. 8.6% Nov. 9.8% Aug. 9.2% Aug. 8.1% Financials

Fed Base Rate Jan. 4.25% Aug. 1.00% Jan. .25% Aug. .25% Sep. .25% Dow Jones Mar. 12,500 Aug. 9,171 Jan. 9,908 Aug. 11,326 Sep. 13,553 Inflation 3.8% 0.4% Nov. 1.1% Jun. 3.1% Jul. 2.6% CPI Apr 216.632 Apr 213.856 Apr. 218.178 Apr. 224.906 Aug. 233.506 Gold Per Ounce Mar. $820.00 Aug. $953.00 Jan. $1,068.33 Aug. $1,677.95 Aug. $1,720.00 Other

Movie Ticket $6.95 $7.18 $7.50 Aug. $8.20 Aug. $8.20 First Class Stamp 42 ¢ 42 ¢ 44 ¢ Aug. 44 ¢ Aug. 45 ¢ College Tuition Aug. $6,015 Aug. $6,585 Feb. $7,020 Jan. $7,605 July. $7,695 Wrangler Jeans

Mar. $15.98 Aug. $17.68 Sep. $15.77

You can also check out our Foods section where you can check food prices for each decade from the 20's to the 90's including 50's Food Prices, --- 70's Food Prices and the 90's Food Prices with a much wider of variety of prices included.



tscout's picture

   I was merely stating what I am doing about it....I can't stop the price surges,,,other than not buying most of the crap on the list. i found four things on that list that I buy. Frankly, I pay twice the prices quoted here, as I buy organic in the US. An organic frozen pizza is 5 bucks. Organic tomatoes are a buck a pop. Eggs,,,3 bucks a dozen,,,when I don't get them from a friend.But I pay less for green toilet paper,,ha!

   Realistically, I just don't eat as much in america,,,,and I feel alot better. It took some weaning,,,but my body is much better for it. The food is just one symptom of the much bigger problem, and we will have to ride it out. Here in china,,,people freak when I tell them I skip meals,,,they think something is wrong with me. Food is such a social thing, and attached to our daily clock,,I believe many people eat out of boredom,,and that familiar feeling of hunger,,which, if left alone,,,dissipates. Fasting one day a week will help give the body time to "catch up", and clear the mind,,,especially if people are eating food from the local supermarkets. The industrialization of food,soon after the first assembly lines were created(enriched flour and processed sugar) were the starting point for most disease in america, and the statistics follow suit in the countries it has been pushed on. That includes the cattle industry..oh,,and eliminating 3meals a day,,,one day a week would slash the food budget too if applied to this chart...

    I think the downfall of Monsanto would help,for more than one reason. My take on it is,,,whenever i eat "bad" food,,,my hunger isn't satisfied. If I eat real food,,,,my body doesn't ask for more. When people are at home,,,and eat supermarket food,,,the body ,,,,unless it is totally polluted,,will just keep asking for more,,,and they just keep eating,,,eventually "thinking" they are satisfied when they are "full".....anyways,,,I'm getting off the subject.....I think people should just grow all they can,,in the space they have,,,and learn to enjoy it! Maybe that's where the situation is pushing us, and will benefit us in the long run....

Wendy's picture

I guess I'm not doing something right because I feel like it's very hard to make ends meet these days. I love the idea of living simply but in spite of that I'm amazed that I can barely find the money to pay bills while I'm working full time. I do love to give money to good causes and I also refuse to compromise on my health and do what it takes to buy mostly organic food. But I buy in bulk, make almost all my food from scatch, and rarely go out. I came to the conclusion this week that it must be the cost of food that is making things ever harder - this in spite of keeping a large garden and ducks.

I wonder if it is easier to live simply when single. I think as a couple, we frequently compromise by allowing both of us to buy whatever we want.

I've also been dreaming for a long time of just quitting. Give up the house and take my bicycle and tent on a long trip. I agree with the article that when you find it hard to save when you are in your prime working years it doesn't feel like it's worth it.

Noa's picture

When I was a kid, a man made enough money to support his family.  There was no need for his wife to work to pay the bills.  Those days are gone.

I know I'm dating myself but, for example, a postage stamp cost 3 cents back then.  What is it now, about 45 cents?  Have wages increased by 15 times their worth from the 1960s?  And that's just one example.  What about milk, butter, eggs, bread, fruit, veg, and meat?

In my opinion, it's a rigged system and this economic penny-pinching is all part of the plan.

We were meant not just to survive, but to thrive.

Hey all,

I'm with you on this noa, I rent a house on my own...$1456 a month rent, gas $70, internet $70, phone $60 , car insurance $70lectricity...$200.....I can't explain the cost of that beyond it must be turtles fault, water heater, lamp, filter......I have few things on stand by, don't heat the house.....and still cant afford to live, middle aged professional male.....wtf .....its all bullshit ..these things don't cost the provider anything like they charge me....not time to justify giving up everything with a cost....

Wendy's picture

Hi Jez-

I'm also wondering how you are dealing with the cad profession? I'm feeling so caged in these days - do you work in a cubical like me or are you able to work from home? I just had a little minor episode with having to go to the hospital for a few days and all is well but I'm left with the nagging in the back of my head that I can't go on working 9 hour days just sitting in front of a computer and feel healthy. I hope you are taking good care to get your exercise in. I find it is a hard thing to do when such a large part of my day in taken up with commuting and sitting in front of a screen. Then theres the other part of me that says I should just live in gratitude that I have a job that is somewhat interesting and pays well (or does it really?)

Hi Wendy,

These days i don't sit at my desk that much, probably only do 2 or 3 hours of cad a week. I have a few roles, the main one now is that i manage our third party certifications, standards and our green program....is interesting and the best job I ever had....I also have 2 bosses and no one person knows what I have to do....but one of the 3 cad guys in my office feels similar to you,..feels stuck....it gets him down and is made worse by the fact his wife only works ,4 days but still makes more money than him even if he includes the kitchens he does on the weekend's...lol...she is a doctor/specialist......I spent 10 Years changing my skills to get out of production and into r & d......has worked out pretty good.....work wise dare I say it....I'm happy.....

Wendy's picture

Thanks Jez,

That gives me hope that perhaps I only need to change jobs, not carreers. In any case I FINALLY made the decision to just give my 2 weeks notice.

Yes, yes, yes.....keep what you have and make it work for you.....I used to date a girl who was a qualified nurse but didn't want to be a nurse, she applied for job after job, retail jobs mainly.....I talked her into applying for medical receptionist jobs where her skills werent required but very handy....she got the first 3 jobs she applied for!.....don't start fresh, just evolve what you have....no waste!....

And woohoo...congrats, few things feel as good as that moment when you say stick this job up your#####.....hehe....too good!....have done it a few times myself...I always quit jobs..lol...

Hey Wendy,

I know a few people who left industry and moved into teaching....ever thought of teaching cad?.....

One big thing that helps with my work day is that I live only a couple of miles from work...don't know what that's worth in $'s but significant in my books...

Wendy's picture

Thanks Jez, That is excellent advice.

fredburks's picture

Hey beautiful friends,

I live in a shared house with five other people, so my rent and utilities is only $550/month even though I live in one of the most expensive housing markets in the world - the San Francisco Bay Area.

I buy food in bulk when I can and am careful to buy the most economical foods. Yet I always buy organic, as I want to support the shift to organic. I rarely eat out. My food costs, including eating out are about $250/month.

I don't own a car and don't have health insurance. I get around on a motorcycle and bicycle. A decent used motorcycle costs about $1,500 and usually last me five to 10 years. Motorcycle insurance costs me $75/year. I don't ride my motorcycle much, so I average only about six gallons of gas a month. So if you do the math, my transportation costs add up to about $50/month.

If you add all of the above essential costs, I spend roughly $800/month on essentials. I end up spending a couple hundred on books, gatherings with friends, etc..., so let's say a total of $1,200/month with this included. Minimum wage in the US is $7.25/hour (soon to increase), which works out to about $1,200/month.

So I can live an enjoyable fulfilling life on minimum wage. And I know of poor families who are really careful with their money, often from the developing world, who support their entire families with kids on minimum wage. As I make more than minimum wage, I generally am able to put 20% of my earnings towards retirement and have never had a problem with money, though I've never earned a lot. I also donate about 10% of my income to good causes.

I very rarely go to movies or performances and instead do a lot of hiking out in beautiful nature and swimming. There are so many great, free or very low costs ways to have fun! What can you do to cut down on your expenses and move more into a place of abundance?

With much love and hopes for a fulfilling life for all,

Hey Fred,

For years i lived on a very limited income...I ccan do the cheap, effecient thing but i also was either not working or working few hours....these days I work a full week, that has a cost to my "self"....I do not believe I should have to struggle while working so hard.....I don't believe the average Joe's wages are fair when you take into account what we have to pay out.....I should not have to go without essentials, i am in much need of dental work but unless I am in pain, can't afford it.......the last quote I got was almost $10,000.....

fredburks's picture

$10,000 for dental work. That's crazy! Do you have to pay for health care in Australia?

Wendy's picture

Hi Fred-

Yes that list makes me realize the cost of owning a car and a home. Maybe I'll get a scooter!

The way it works here if you have private health insurance you have to pay the "gap", difference between what the doctors charge and what the insurance will pay....so if you go to hospital it costs, a guy at work has been in hospital recently, he went public, cost nothing, if he had insurance, would have cost $20,000...the catch is public you might have to wait, in pain for a couple of years and you could have an intern operate on you, no choices .... dental is barely covered in the insurance, you always have to pay....

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