As human beings, we are hard-wired to live for today. For most of our existence, that is what we did. We set out in the morning to hunt and gather what we needed to survive for that day. We did not worry about tomorrow until tomorrow came.
Our natural state is not to delay ourselves gratification.
This mindset was also reinforced by the limits of technology. Many things could not be easily stored. You used it as you acquired it. It was not until refrigeration was developed that it was possible to store many items for future use.
All of these limitations also made the older members of the tribe a potential liability to the group. If someone could not produce what they required to be sustained on a daily basis, it placed additional pressures on everyone else.
You worked until you dropped. Retirement was not an option. Therefore, it was not given a thought.
This was the reality of human existence for thousands and thousands of years. It is hard to break brain patterns that evolved over that length of time.
The abundance we have today, and the choices that are available to us, make it even more difficult to save. The ease of seeing what others have (through tv, movies, social media) and the fact that marketers are constantly trying to influence us to buy their products just adds to the pressure.
Ben Carlson, who writes an investment blog "A Wealth of Common Sense", asked an interesting question recently, "Are SUV's Ruining Retirement Savings?"
SUV's are all the rage these days. If you think you see a lot of them on the road, you are right.
In 2013, SUV's and trucks made up 50% of all vehicle sales. By 2016, that number was up to 63%. Today they compose an astounding 67% of all sales.
That must be a big reason why the Ford Motor Company recently announced that it will not longer manufacture any passenger vehicles other than the Mustang. It will only make SUV's, trucks and crossover utility vehicles.
However, as Carlson points out, SUV's generally cost more than sedans and compacts. They also guzzle a lot more gasoline. Yes, it is hard to be driving a sensible sedan or a Sienna when everybody else is driving a Suburban or Sequoia . However, every dollar spent today on that SUV is one less dollar saved and invested for retirement.
The prices of many of these SUV's are now surpassing what I paid for my first house 40 years ago.
That is why so many vehicles are leased today. Most just want to get the lowest monthly payment even though it is much more sensible financially for most to buy a vehicle and drive it as long as they can.
On that note, I thought this was also an interesting list that Carlson referred to in his blog post that shows the top 15 vehicles that people hold onto for 15 years of longer.
Note that there is not one American nameplate on that list. You also have to admire the obvious reliability of those Toyota vehicles that keeps those original owners behind the wheel for 15+ years.
Carlson sums it all up with some excellent personal finance advice.
Personal finance experts love to discuss how much money you can save by avoiding that daily Starbucks habit or packing a brown bag lunch every day at the office. While I guess you could add to your bottom line somewhat by cutting back on the little things (a) this stuff doesn’t move the needle all that much, (b) it’s the little things in life that can give you small joys on a daily basis and (c) the large purchases will have a much greater impact on your bottom line.
If you can right-size your housing and transportation costs on a monthly basis, everything else becomes easier from a saving and budgeting perspective (income is the third leg of this stool but that’s a topic for another day).
Behavioral mistakes are potentially even more harmful to your bottom line in the personal finance realm than the markets. At least when you make mistakes with your investments you’ve already put that money aside. When it comes to personal finance mistakes, you’re often hurting your chances of saving enough money in the first place.
Buying an expensive car or SUV can be an enormous savings killer for those who aren’t putting enough money aside for the future.
If you’re maxing out your retirement accounts, saving for your children’s college fund, and have a nice emergency savings backstop, by all means, enjoy your expensive gas guzzler if you have some money left over. There’s nothing wrong with guilt-free spending when all of your other bases are covered.
But if you’re one of the many people who are woefully unprepared for retirement or any of your other saving goals, a good place to start would be cutting back on any unnecessary spending on transportation.
I would put it this way.
Enjoy the ride (your life) but recognize that the distance you will ultimately travel (your longevity) is a long way off. Make sure you have the fuel (savings) to make it to your final destination.
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