Currently, the average American household carries $137,063 in debt, but only makes $59,039 in income per year.
In some states, the ratio is even worse. In California, for example, the per-resident debt balance is $65,740 while residents make about $28,000 annually on average.
Debt to income ratio is an important measure of how people are handling their money. It’s not the only measurement, but it can tell us a lot.
I’d like to return to these statistics in a moment. But first, I’ll change the subject.
I am often confronted with a question about minimalism that goes like this, “My parents grew up during the Great Depression. They were taught a ‘waste not, want not‘ mentality. How do I help somebody with that worldview embrace minimalism when it appears to run contrary to everything they were taught growing up?”
It’s a good question and one that must be answered. In fact, in The More of Less, I write about the different generations and how factors of their upbringing may impact their view of possessions. (I also address why each living generation is currently drawn to owning less).
It is important to remember that a waste not, want not mentality to possessions is required when goods and resources are scarce or difficult to access. But when that same mentality is brought into an environment where goods are increasingly affordable and accessible, it often results in the accumulation and keeping of possessions that are not needed.
A grandmother once shared with me how this mentality resulted in a burdened life. She learned at a young age, because financial resources were limited, to take advantage of sales and never get rid of anything that could eventually serve a purpose.
“Joshua,” she said, “I have piles and piles of ungifted Christmas presents in my basement. Every year, after Christmas, when toys were put on clearance at department stores, I would stock up because I couldn’t pass up a sale. But by the next Christmas, there were new things that the kids wanted, and those toys would always go on sale. So, I bought them and gave the new toys. But sure enough, when Christmas toys went on sale after the holiday, I would buy more thinking I could use them as gifts at a later date. The stack of ungifted Christmas gifts in my basement has grown and grown over the years.”
This, from my experience, is what happens when we bring a waste not, want not mindset into a world of abundance. We accumulate at too fast a pace, and rarely decumulate.
I should mention, at this point, that minimalism doesn’t mean we become reckless with the possessions we have. We don’t wastefully throw away everything in our home with the assurance that it can be quickly replaced. That’s not minimalism—that’s irresponsibility. Minimalism has just the opposite effect, it calls us to be increasingly thoughtful in the things that we own. And if something is worth owning, it is worth buying something quality that will serve its purpose for a long time.
I want to talk a little bit about the waste not, want not mentality because it is still a valuable approach to life—not in terms of possessions or the things we keep stacked up in the garage just in case we can use them in the future.
I’d like to consider the wisdom of waste not, want not, when it comes to our finances and how we spend our money.
Let me repeat the numbers above: The average American household carries $137,063 in debt, but only makes $59,039 in income per year.
Additionally, here are some other economic facts from our country:
- 58% of Americans have less than $1,000 in savings.
- 78% of U.S. workers are living paycheck to paycheck.
- 85% of Americans feel stressed about money.
These are fascinating stats to me considering America is one of the wealthiest nations in the history of the world. It doesn’t seem like 85% of us should feel stressed about money or that 78% of us should be living paycheck to paycheck.
I realize, of course, there are some uncontrollable, external factors that may be impacting our personal finances. Losing a job, a medical emergency, or unexpected tragedy (just to name a few) may result in some of us being included among the statistics above.
But for many of us, our finances are entirely under our control and we still struggle to get ahead.
The reason this happens is because we waste too much money on things we don’t need to buy.
We buy clothes we don’t need, furniture we don’t need, decorations we don’t need, kitchen tools we don’t need, cars we don’t need, technology we don’t need, even square footage we don’t need.
We struggle to get ahead financially, but our garages are so full of boxes we can’t park our cars inside them. This is all wasted money!
Adopting a waste not, want not mentality to possessions in times of great affordability and accessibility often results in owning more than we need.
But adopting a waste not, want not mentality to money in times of great affordability and accessibility is essential!
Money is a complicated issue with any number of different variables that come into play in our individual lives. But there is one principle that is important for each of us to adopt:
The less money I waste, the more money I keep.
And the less money you waste, the less stress you feel and the sooner you can get ahead financially. Waste not, want not.