Crisises lead to fiscal responsibility

As a financial adviser I quickly learned the difference between how 40 or 50 year olds thought about money, investing and risk as opposed to their Depression era parents or grandparents.

To the grandparents, it was smoke and mirrors.

My generation and the few before me have never lived through a Great Depression. We had rough patches and deep recessions in the 70's and 80's but nothing on the scale of the Great depression. When we came out of those slumps it was spend, spend, spend.

This one may be different.

We are seeing the steepest loss in jobs since the 70's and its not over yet. Gas prices are falling like a stone but people are cutting back on driving, SUV's sit idle on the lots. Over 1,000,000 Americans have lost their jobs (I account for one of those) and it is expected to get uglier. Dr. Rajeev Dhawan from the Economic Forecasting Center of Georgia State University was quoted in November as saying, "This recession is much more severe than projected in our August report. So far, we have lost a million jobs and I expect we will lose two million more within the next 12 months." The Associated Press confirmed the potential by reporting job losses for November at a staggering 533,000.

"We get it, enough bad news, where are you going with all this?" you might ask.

We have to learn from the mistakes of our history and our government and recover what our Depression Era elders have been trying to tell us.

It's all smoke and mirrors. Fiscal responsibility begins at home.

Just like Bill Clinton taught an entire generation that oral sex isn't really sex our government is trying to teach people that if you get into financial difficulty as a country you can always print more money and elect a President to bail you out. If it works for the country, shouldn't it work for me?

No.

Trying to get someone who lived through the Great Depression to invest in emerging markets or contrarian funds is like trying to get a cow to walk down stairs. It's not happening. They will buy CD's and bonds or keep their money in their mattress where they can see it and know its safe. They will buy a new car when the wheels fall off the old one and they will clip coupons and eat Early Bird Specials, but most of them could buy and sell the rest of us many times over.

They learned fiscal responsibility.

I have long forgotten the lessons my step grandfather taught me about being careful with your money and saving when you have plenty to carry you when times are tough. Those memories have been replaced with lessons like "there is a such thing as good debt," and "you can always tap into your home equity."

I like my grandfather's advice better. We should all go back to it.

It is estimated that 35% of Americans have less than $10,000 in savings. That won't get you far in an economic meltdown.

I am sick of debt, sick of people trying to convince me of more debt and tired of keeping up with the ubiquitous Joneses.

Maybe this financial crisis will awaken Americans to financial reality that living beyond your means, regardless if you are a family or a country, is dangerous.

I think I will hike up my pants, start wearing a sport coat and hat when I go downtown and stop wasting money- my grandfather would be proud.
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