We all know that time keeps moving on and waits for no one. It is amazing to reflect on the advances in technology many of us have witnessed in our lifetimes. The rise of personal computers, cell phones, the Internet, and instant communication is unprecedented. Could you imagine trying to predict and explain this to someone a generation ago? We would like to explore 4 significant lifestyle changes in the past 40 years that have made a significant impact on our finances.
The pace of change with the technology is amazing. Gordon Moore, co-founder of Intel, noticed this trend forty years ago:
Moore’s Law is a computing term that originated around 1970; the simplified version of this law states that processor speeds, or overall processing power for computers, will double every two years.
Could he or anyone else have imagined the impact this would have on our lives?
We will examine four common lifestyle changes that have occurred over the past 40 years. Let’s review them in order of the most expensive first.
1) Housing square footage and people per household
Housing square footage increased between 1975 and 2010 from a median of around 1,500 sq. ft. to nearly 3,000 sq. ft. This represents a 100% increase, or a doubling, in the average size of our homes. The term “McMansion” was coined to describe this trend of super-large homes.
Maybe our family sizes have grown and we need more space? Nope, actually the number of people per household has decreased from three to about two and a half. This reflects an approximately 17% decrease.
The trend of the average house increasing in size would seem that we have adopted the “bigger is better” principle. Why else would square footage need to be increased when there is an actual decrease in people living in a home?
The last surprise is that the average percentage of total household income needed to either own or rent is hovering at about 50% of American’s total expenses.
2) We own more cars
When we look back at the year 1969, nearly 70% of households had no vehicles or only one vehicle. Fast-forward to 2009 and that trend has nearly reversed, with only 40% of households with one car or less. Owning one car today can be socially awkward since this is considered unusual behavior.
The new normal is to own three vehicles. It seems we cannot own just one car per person today. The data has shown three-car families have grown from 5% to nearly 25% over this period, nearly a 400% increase. If you have five people in a household, there will probably be six vehicles.
This has not been a great development for reducing our transportation costs. We now need to maintain, repair, fuel, and insure more vehicles than before. Of course, we now need to have larger garages to store them. Unfortunately, those garages are probably at capacity with other stuff.
3) TVs now occupy nearly every room in the house
I can remember when our family purchased our first black and white television. The next great milestone was when we bought a VCR that had a wired remote control. This eliminated the need to get up from the couch to stop or fast-forward the tape. It was a wonderful invention because, as kids, we had to do the work of changing the TV channel or managing the VCR tape. This new handy remote connected us to a wonderful recording device and kept us planted on the couch.
Today, many homes in America have flat-screen televisions in nearly every room.
We have seen the number of TV sets per household increase from 1.57 in 1975 to 2.93 in 2010. We effectively doubled the number of sets per household. Today there are only 17% of households that own one TV, while 55% have three. Yikes!
I am afraid to look at the statistics on how much time our country spends watching those three televisions. The programming subjects us to a constant bombardment of advertising messages. We are frequently reminded that our lives are incomplete unless we buy what advertisers are hawking. We need to own the new house and car and take exotic vacations. How about needing to buy that next cell phone? Speaking of cell phones…
4) Phones have moved from the house to our bodies
I can still remember the days when my parents had one phone that shared a “party line” with other people. You also needed to use that old school rotary dial, giving your fingers a dialing workout.
Americans went from owning 340,213 phones in 1985 to 300,520,098 in 2010. We own 300 million phones!
Our society has become a “we want what we want, when we want it, where we want it” culture. Take a moment the next time you are standing in a public line somewhere and notice your surroundings. People have become mesmerized by their smartphones! It seems that can’t miss a single minute of action.
Welcome to the new normal.
I’ve pointed out four trends that have increased significantly over the past four decades: our homes have gotten larger with less people living in them and we own more cars, TVs, and cell phones. For me, the cell phone has become a double-edged sword in that it has given me mobility yet also has me feeling a bit too connected.
Everything changes and nothing stands still. – Heraclitus of Ephesus, c. 535 BC – 475 BC
What is important to consider—especially for us in the frugal and early retirement crowd—is how the pace of change influences our expenses. Today’s rate of adoption has become the new normal—a classic example of “lifestyle creep,” where we could not possibly live with last year’s model 6 when the version 7 is slated for release next week. In fact, we should probably wait in line overnight to buy it!
This can be a very expensive lifestyle, trying to be current on all the latest inventions, services, and manufactured products that once were considered extravagant. Now these wants have become default needs. It is high time to be aware of what this is doing to our expenses and the impact that constant upgrades and updates can have on us.