𝐿𝒶𝓃𝒶 on Nostr: One reason Boomers and the Silent Generation think the younger generations spend ...
One reason Boomers and the Silent Generation think the younger generations spend their money unwisely is that the cost of luxuries and the cost of necessities has flipped. Let's look at some examples. First, let's establish a baseline income. (All numbers are rounded for simplicity)
Median income
1960: $5,600 ($467/month)
2024: $59,300 ($4,942/month)
What we're seeing here is that 2024 money is roughly 1/10th the value of 1960 money. Keep that in mind going forward. Now, let's look at the cost of some necessities.
Rent
1960: $71/mo (15% of monthly income)
2024: $2,000/mo (40% of monthly income)
Food
1960: $25/mo (5% of monthly income)
2024: $420/mo (9% of monthly income)
Electricity
1960: $5/mo (1% of monthly income)
2024: $145/mo (3% of monthly income)
Everything across the board is more expensive. Just keeping a roof over your head, food on the table, and the lights on, now eats up more than half your monthly income, whereas in the 60s, it would barely take about a fifth of your earnings, leaving nearly 80% of your paycheck as spendable cash. Let's see what they were spending it on.
New TV
1960: $500 (107% of monthly income)
2024: $700 (14% of monthly income)
New Phone
1960: $50 (10% of monthly income)
2024: $280 (5% of monthly income)
New Furniture
1960: $200 (43% of monthly income)
2024: $1,200 (24% of monthly income)
Restaurant dining for two once a week
1960: $20 (4% of monthly income)
2024: $128 (2% of monthly income)
This is really interesting data to me. The price of luxuries as a percentage of your monthly income is literally flipped. Meaning that most luxuries were roughly twice as expensive in 1960 as they are now.
- A 1960s rotary phone (rented from the phone company) would set you back the equivalent of $500 bucks a month in today's money.
- Buying yourself a brand new 1960s color TV cost the equivalent of your entire month's salary.
- Today, you can eat out every single day, three times a day, and still not spend as much as your monthly rent. The same practice in 1960 would cost you the equivalent of 3 month's rent.
But to me, the real proof of concept here are things that toe the line between "luxury" and "necessity". For instance, the price of cars. A car might be a necessity if you want to hold down a steady job. But driving around a *new* car is a luxury.
Used car
1960: $1,595 (3½ months salary)
2024: $25,571 (5 months salary)
New car
1960: $2,600 (6 months salary)
2024: $48,000 (9 months salary)
Notice how they've stayed roughly consistent from 1960 to today? Sure, cars are more expensive in general. But is the "luxury" of driving a new car more expensive now, than the luxury of driving a new car was, then? I would argue not. It's still roughly 2½-3 months' salary more expensive than driving the used version.
This unlocks everything you need to know about the older generation's relationship with money. See, when a Boomer/Silent sees you eating out every day, catching a quick meal at McDonald's in between your three full time jobs, buying a new phone, or spending a little extra cash to catch a movie, all they see is frivolous, undisciplined spending. And when they see you struggling to pay rent, buy groceries, or pay the electric bill, they can't imagine not having the money immediately on hand to pay those cheap bills, so you must therefore be lazy or stupid or both.
Nevermind the fact that the world has literally flipped its priorities. "Luxuries" are ridiculously affordable now. It's the "necessities" that sometimes break the bank.
Median income
1960: $5,600 ($467/month)
2024: $59,300 ($4,942/month)
What we're seeing here is that 2024 money is roughly 1/10th the value of 1960 money. Keep that in mind going forward. Now, let's look at the cost of some necessities.
Rent
1960: $71/mo (15% of monthly income)
2024: $2,000/mo (40% of monthly income)
Food
1960: $25/mo (5% of monthly income)
2024: $420/mo (9% of monthly income)
Electricity
1960: $5/mo (1% of monthly income)
2024: $145/mo (3% of monthly income)
Everything across the board is more expensive. Just keeping a roof over your head, food on the table, and the lights on, now eats up more than half your monthly income, whereas in the 60s, it would barely take about a fifth of your earnings, leaving nearly 80% of your paycheck as spendable cash. Let's see what they were spending it on.
New TV
1960: $500 (107% of monthly income)
2024: $700 (14% of monthly income)
New Phone
1960: $50 (10% of monthly income)
2024: $280 (5% of monthly income)
New Furniture
1960: $200 (43% of monthly income)
2024: $1,200 (24% of monthly income)
Restaurant dining for two once a week
1960: $20 (4% of monthly income)
2024: $128 (2% of monthly income)
This is really interesting data to me. The price of luxuries as a percentage of your monthly income is literally flipped. Meaning that most luxuries were roughly twice as expensive in 1960 as they are now.
- A 1960s rotary phone (rented from the phone company) would set you back the equivalent of $500 bucks a month in today's money.
- Buying yourself a brand new 1960s color TV cost the equivalent of your entire month's salary.
- Today, you can eat out every single day, three times a day, and still not spend as much as your monthly rent. The same practice in 1960 would cost you the equivalent of 3 month's rent.
But to me, the real proof of concept here are things that toe the line between "luxury" and "necessity". For instance, the price of cars. A car might be a necessity if you want to hold down a steady job. But driving around a *new* car is a luxury.
Used car
1960: $1,595 (3½ months salary)
2024: $25,571 (5 months salary)
New car
1960: $2,600 (6 months salary)
2024: $48,000 (9 months salary)
Notice how they've stayed roughly consistent from 1960 to today? Sure, cars are more expensive in general. But is the "luxury" of driving a new car more expensive now, than the luxury of driving a new car was, then? I would argue not. It's still roughly 2½-3 months' salary more expensive than driving the used version.
This unlocks everything you need to know about the older generation's relationship with money. See, when a Boomer/Silent sees you eating out every day, catching a quick meal at McDonald's in between your three full time jobs, buying a new phone, or spending a little extra cash to catch a movie, all they see is frivolous, undisciplined spending. And when they see you struggling to pay rent, buy groceries, or pay the electric bill, they can't imagine not having the money immediately on hand to pay those cheap bills, so you must therefore be lazy or stupid or both.
Nevermind the fact that the world has literally flipped its priorities. "Luxuries" are ridiculously affordable now. It's the "necessities" that sometimes break the bank.