When Scott was in high school, he got his first credit card offer in the mail. “I signed up for every one I got," he said. “No one ever taught me how to use them, so to me, it was like free money.”
He laughed before telling the rest of the story. "Anything I wanted, I bought. You know, I'd go travelin' cross-country, hotel rooms, gas," he said. "I had [a card with a limit of] $2,000. And that took me on the Texas run and back. I had to buy a tire and an alternator, and it went out. No problem. That was really fun—spent the night in Oklahoma City."
Scott, a 26-year-old truck driver at the time we interviewed him in 2010, said he knew he was supposed to make payments. But instead he would call and get extensions, saying, “Hey, you know, it’s been a hard month, can you give me another month?” He added, almost in disbelief, “And they still let me use my credit card!”
Not surprisingly, this did not end well for Scott. “Yeah, look how much I’m in debt. And there’s a ton of kids that are,” he said “Like, we weren’t really taught about that stuff. And I don’t really fully understand why we weren’t.”
Regarding wise money management, he said:
They need to put something like that in the schools. I mean, I know there are people [who] are smarter with that stuff than me, but I was never taught by my parents or schools how to manage money. And, you know, I just thought when I got it, I could spend it.
In our interviews with young adults in southwestern Ohio, Scott’s sentiment was not uncommon. Just as we heard young adults lament the lack of “marriage models,” they also felt as if they had few models for how to manage money.
Mark, 29, said that he feels he “let the last decade slip away.” Like Scott, he had maxed out credit cards and eventually filed for bankruptcy. Mark told us:
I’ve always had a full-time job since I was 16, besides [a few periods of unemployment]…. but when it came to getting paychecks, I still never learned to deal with or manage money right. I was dumb about money, and then…going to a [payday lender], thinking it will be all right, but that’s just one big trap, and once you’re in it, it keeps you in it. (It’s also worth noting that a portion of Mark’s debt came from his lack of health insurance.)
Mark’s dad was never very strict with him about anything, and his mom had a compulsive spending problem. “She’ll get all depressed,” he explained, “and she’ll start just charging stuff on QVS and s**t…. she has racked up so many debts in credit cards. That’s why my dad had to refinance the house twice, that’s why they filed bankruptcy.”
Mark said he doesn’t want to blame his parents entirely for his own financial problems—“I don’t want to say that it’s hereditary, I’m not gonna blame it on my folks.” But he pointed to what he sees as a problem with the culture in the small town where he was raised. He and his parents were surrounded by people in similar financial situations. It was normal to not have a bank account and to instead rely on check- cashing places, which also had payday loans. It was normal to buy a car from car dealerships with high-interest rates, like J.D. Vance describes almost doing in Hillbilly Elegy, until his military recruiter explained the high-interest rates and told him to instead get a quote from a respected credit union.
As Mark put it,
It’s just the neighborhood and how you’re brought up and raised. Managing money was never really an ethic that was taught to me I guess, it was something that I had to learn the hard way, and it has taken almost 30 years to come to the realization of really how to start and thinkin’ about how to do it.
In his book, Thrift: The History of an American Cultural Movement, journalist and history professor Andrew Yarrow describes the surprising and mostly-forgotten history of a broad-based thrift movement that sought to spread the ethic that Mark feels he was never taught.
The movement flourished from the eve of WWI to the stock market crash of 1929, and then limped along until 1965 when the National Thrift Committee was officially disbanded and thrift education was replaced with a more narrow focus on economics and “wise spending.” Prior to that, the Committee’s main educational campaign was “National Thrift Week,” which began on Ben Franklin’s birthday each year (January 17th). Newspapers like the New York Times offered daily coverage of events, schoolchildren sang odes to thrift and deposited pennies in school savings banks, thrift talks were hosted for factory workers and others, and celebrations were organized in hundreds of towns and cities across the country. In 1927, the governors of 25 states made official declarations and appeared at Thrift Week activities. Presidents Wilson, Harding, Coolidge, and Hoover publicly extolled the virtues of thrift. According to President Calvin Coolidge’s secretary, some of the most frequent requests for public comment from the President were for “statements to be used in thrift campaigns.”
The movement was one of “strange bedfellows,” as Yarrow puts it, including “YMCA leaders, ardent populists, conservative politicians, Wall Street financiers, Jewish business leaders, Christian evangelists, Victorian ladies, temperance advocates, and civil rights pioneers.” For example, two of the movement’s most prominent figures were Simon William Straus, a Jewish businessman and philanthropist who helped finance thousands of early twentieth-century American buildings, including the Chrysler building, and Bolton Hall, a labor activist and founder of the “back-to-the-land movement,” who wrote two books on thrift and, according to Yarrow, “made thrift the underpinning of his philosophy.”
Since the movement was far from monolithic, so was its understanding of thrift. As Yarrow writes, "A broad definition of thrift embraced hard work, saving, and frugality, a call to spend and use resources wisely, an antipathy to waste, a strong belief in self-control, a similarly strong belief in industriousness, a call for generosity, a sense of responsibility to others, and an ethic of conservation, stewardship, or husbandry of resources.”
In other words, thrift was more than financial education in the way that we think of the term today, with an emphasis on skills like balancing a checkbook or reading a credit card statement. Thrift education was character education and sought to form traits like self-control and hard work. While sometimes seen as antiquated, in this way thrift actually fits well with recent literature on the importance of “non-cognitive traits” like delayed gratification and grit. (See Paul Tough’s book, How Children Succeed: Grit, Curiosity, and the Importance of Character, or Richard Reeves’ article, “The New Politics of Character.”)
Furthermore, some young adults I spoke with seemed to attribute their woes to the lack of these kinds of non-cognitive traits. As Savannah, age 20, told me, “Oh, I'm bad with money. I'm real bad with money. Like my number one priority right now is to get a pack of cigarettes and go to Target and get me another pack of gel nails. And that's pathetic.” She said that no one ever taught her about money, but when I asked her if there was anything that she would find helpful in managing her money, she laughed and said, “Basically, I know what I need to do and I just don't want to do it.” She knew that she shouldn’t spend money on superfluities when she and her boyfriend were not able to afford necessities. But she saw her money management one as having more to do with lack of willpower than with lack of knowledge.
That’s not to say that the fault lies entirely with Savannah. I suspect that the other things she told me about—the chronic stress in her life, the trauma she experienced as a girl, poor relationships with her parents, the manipulative and abusive relationships she found herself in with older men, and addiction and mental health issues—may have impeded the development of important character traits like delayed gratification. The solution in these situations is not a mere bootstraps approach, but a holistic one that for some may include the need for psychological healing.
That said, her story does illustrate the insufficiency of financial education that only touches on a narrow set of techniques. Like the thrift education of old, it must also include the formation of the character traits needed to carry out wise money management. This is because most people know they should spend less than they earn. But to actually do so can be difficult, either because they lack certain character traits or because their wages are simply not enough to pay for necessities without going into debt. (A related conversation, which David has addressed, is the importance of a living wage.)
Mark saw his situation as primarily a problem of the former. “I may have only been making $10, $12 dollars an hour," he said, "but still, when you’re working 40-50 hours weeks and you’re at home [with your parents] and you’re not paying rent, there’s no excuse that I shouldn’t be in a different boat than where I’m at.”
His Ohio hometown also has a relatively low cost of living. He said it would have been possible for him to save 20 percent of his paycheck, and that if he had done so, he would probably be buying and flipping houses right now instead of still living with his parents.
Instead of saving, he was “just being dumb and partying it away and pissing it away at bars and this and that, just living beyond my means, buying things I shouldn’t be buying.” He said he regrets “living a champagne lifestyle on a beer budget.”
According to the American Psychological Association’s “Stress in America” survey, money is consistently one of the top sources of stress for Americans. The survey also reveals that most Americans (95 percent or more respondents) agree that parents talking with their kids about money is important. But only 64 percent said they themselves were taught how to manage money.
But as Mark pointed out, even though his parents did a poor job of teaching him about money, he didn’t want to blame them entirely. Rather, their inadequacy points to a larger social problem—a culture which does little to support thrift and much to undermine it.
National Thrift Week is probably not the solution to all our nation’s woes. But a renewal of the thrift movement recalibrated to today’s challenges might provide the support parents need to teach their children about money, and could also help to fill the gap for those like Mark, Scott, and Savannah whose parents missed the opportunity.