 The Great Depression is an economic stain on the history of the United States. Many analysts claim it took as many as fifteen years to come through this national crisis. Others claim it took a war to put America back on track.
Economists today wonder why is took so long to breathe new life into the economy.
Here are a few survival lessons from the Great Depression we may do well to pay attention to in the midst of our current global economic meltdown.
7. Find ways to reduce spending. Depression survivors were absolutely forced to cut back. They did not have the same easy access to credit we have today. Cut back or eliminate luxuries, shop around for the best insurance rates, investigate refinancing plans that can reduce your total repayment on your home or even sell a newer vehicle for something less expensive.
6. Make full use of everything you currently own. In order to survive many families would commit to fixing hole in socks, patching pants and repairing items they might have replaced in better times. Today this might mean driving a vehicle longer than planned, learning repair skills for home improvements or appliance repair and eating in even when you’d rather dine out.
5. Quality and value are more important than style and fad. When faced with economic collapse the people in the Great Depression relied on buying only products that provided durability. They had little short-term use for items we might think of today as impulse buys.
4. A savings plan can help you weather financial storms. By committing to placing funds aside for use during a crisis the American people were able to make ends meet without borrowing from their future by using credit.
3. Don’t spend more than you earn. While this is simple logic there were many early in the present recession that indicated they had no plans to alter spending habits to counter the negative effects of the crisis. Delayed gratification is a term used to describe enjoying something even more once you can actually afford it.
2. Be careful not to develop an entitlement mindset. Prior to the Great Depression the American people looked to each other and to charitable organizations to assist when hard times came. Decisions made during the Great Depression caused many to look exclusively to the government to provide personal assistance. This slowed down the recovery process and ultimately resulted in a massive tax burden for the American people.
1. Government bailouts don’t always help. UCLA economists point to the role of then President Franklin Roosevelt as one of the primary reasons the Great Depression lasted so long. His stance on “anti-competition and pro-labor” is believed to have held the economy hostage. The common belief today is that if Roosevelt had allowed business to respond and adjust to the altered economy without governmental intervention the recovery would have happened much sooner.
We all wrestle with how to manage personal finances in the midst of the recession we are currently experiencing, but the primary lessons learned from the Great Depression can be found in the role of self-reliance and frugality. When we fail to seek personal solutions we may falter while waiting for someone else to come to our rescue. Planning and preparation for difficult days may be the greatest legacy passed on by those who survived the Great Depression.
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