A Bit of Economic Pain Won’t Hurt

I look at young people today and find it interesting to watch them come to grips with what is likely to be their first real taste of the pain that comes with higher inflation and lower standards of living. Many young adults (and not so young) have become so accustomed to an easy life today that there is an air of expectation of a minimum standard that they are entitled to. It’s a little detached from reality and I don’t think a hard wakeup call would hurt. It all depends on what you get used to, but 2023 is going to be a shock for many. But the reality is it is all about perspective.

Growing up in Geraldton, WA my dad always told me I had to work, he’d never give me a cent, but that I’d always have a roof over my head if I needed it. The irony of that was not lost on me when at 18 he told me I was too hard to live with and needed to leave. To be fair I was pretty hard to live with. Fortunately, I had somewhere to go, Dad had a 1-acre industrial block with a couple of sheds on them he rented out to local transport business. At the back of the yard was a 3m x 3m tin shed, about the size of a bedroom. It had a toilet and a sink and dad put down some carpet to make it feel real homey for me. We used Selleys gap filler all around the shed to keep out the spider and snakes. I threw a mattress on the ground and bought an electric fry pan. He charged me $30 a week rent which was probably above market value for a tin shed in a Geraldton industrial complex in 1994. But to be honest I loved living there.

At 18 I’d also started going out with my future wife, Paula who I would marry 2 years later in 1996. We planned to go to Kalbarri for a honeymoon for 3 nights but didn’t because we had less than $10 in our bank account when the time came. We had bought a block of land for $25,000 with the $3,000 cash I had in my top draw from working as a brickie’s labourer in my school holidays. The local Town and Country Building Society Manager was kind enough to defer settlement on the block until Paula turned 18 and was able to sign the forms herself. Then we started building the house, it was a 4x2 and cost $59,000. Paula made about $14,000 a year and I made about the same in our first jobs. It was a big commitment and things were tight, there were a lot of things we chose not to have and couldn’t afford.

Once the house was ‘finished’ we moved in. We had no bed, we slept on a mattress on the ground for our first 2 years. We had no carpet, only concrete. We had no blinds or curtains, only black plastic taped up to the windows. The front yard and back yard were empty. We spent the next several years working hard to save up and one by one we got each of the items ticked off to slowly complete our home. If I tell my kids or their friends that they can’t understand why we did it. I think everyone has become so accustomed to getting everything they need immediately they have not only forgotten how to go without or save for something over time they don’t even entertain the idea as part of the options to consider.

But all of this is just to point out how easy we all have it today. How my wife and I did things when we were married young was no different from many who did the same a generation earlier than us. Back even further, my grandparents came out from Italy before the war and certainly everything they did simply to raise their family was many times harder than anything we went through. It is all about perspective. I don’t think an economic downturn is the worst thing in the world. Many may think that it is and as inflation continues to run above wages growth and the cost-of-living soars many will need to make adjustment to their spending just to make ends meet. But adjustments can always be made and a new perspective and appreciation of frugality for the younger generation coming through may be just what they need to prosper in the years ahead. It doesn’t hurt if you don’t start off with everything. In fact, I would say there are great lessons in having nothing to start with at all.

General Advice Disclaimer: This information is of a general nature only and may not be relevant to your particular circumstances. The circumstances of each investor are different, and you should seek advice from an investment adviser who can consider if the strategies and products are right for you. Historical performance is often not a reliable indicator of future performance. You should not rely solely on historical performance to make investment decisions.