Sustainability — in both the environment and frugality senses — on the half of Americans will make this post-recession era different from most, argued economist Chris Farrell at a forum at U. Minnesota Thursday.
Americans won’t be able to go back to their spendy ways simply because the means will not be there to allow them, he said.
Whereas after previous downturns Americans maintained frugality only for a short time before going back to their original ways, Farrell said, banks will now become tougher lenders after such a borrowing-driven recession.
The event was the year’s last in the Headliners speakers series, put on by the University’s College of Continuing Education.
CCE dean Mary Nichols introduced Farrell, placing his topic in the context of past Headliners topics, among them the recession itself, and health care reform.
Farrell charmed the audience, made mostly of senior citizens, with his nerves of speaking to “real people.” He is most known for his radio broadcast work with American Public Media.
“This is a major sea change, a transformation we’re going through,” Farrell said.
“Sustainability,” he said, “has moved from the fringes of our society to the mainstream,” especially on college campuses.
This environmentalism, linked with general frugality, produces a powerful combination.
“Being green and being frugal reinforced each other,” he said.
Complementing his venue, Farrell stressed the importance of education throughout a lifetime.
Young people should save with a different attitude, he said, going as far as asserting that forthcoming generations may have to choose between investing in an education and investing in a home of their own.
“Sideline jobs” and freelance work are also advisable for younger people, according to Farrell, simply for the sake of a back-up plan.
Diversified education will serve as padding for career shifts, whether self-imposed or unexpected, he said.
In other post-recession advice, Farrell stressed the importance of charitable giving, saying it should be the core of households’ financial planning.
These types of payments force consumers to think the most about where they want their money to go, and this, he said, could spill over to the rest of expenses and produce more financial thoughtfulness.
More generally, Farrell advised, “keep it simple.”
While during other economic times — and downturns — Americans led simpler lives, now we have more aspects to day-to-day life, and finances, at least, should be kept simple.