Rise of the Consumer

 

It’s amazing how lifestyles changed over the decades.

This article lists how our lives evolved compared to our parents’ and grandparents’.

From fashion, technology, holidaying, having a baby and home improvement. It will surprise you!

We also look at what helped facilitate this change and its journey of popularity from the sixties onward.

I take this information from a chapter in my book –

 ‘What’s Your Financial Gameplan? – Rise of the Consumer’. I also include links to research that backs up the information provided in this write-up, you will find these links at the end.

The main reason for this growth in consumerism was the expansion of DEBT in Western Countries. People had greater freedom to access readily available money. Of course, this was a process that grew through the decades.

 

These increases in credit facilities were because of three reasons

 

1. A more lax approach to lending by banks and financial institutions. Borrowing money became easier with passing decades.

2. Governments helped by having more lenient regulations for the banks and building societies. They also assisted by keeping interest rates low.

3. We, the individual or family, took out the now affordable credit facility offered by the banks that the government approved through their lenient regulations.

 

We moved away from having a savings mentality to one of debt. Savings no longer had growth potential because of lower interest rates and debt was cheap and easy to access.

The Office for National Statistics showed household savings ratio falling sharply in 2016 to 3.3%, the lowest since records began in 1963.

 

Our parents and grandparents had a simpler lifestyle. They lived within their means and were wary of debt. They also wanted to save because interest rates were higher, therefore savings grew.

How debt evolved:

1) LOAN

We define a loan as the temporary provision of money (paid back with interest).

A loan twenty or thirty years ago was not as easy to acquire as it is today. The banks had strict guidelines they would follow before a person could qualify for a loan and it was a longer process to apply than it is today, lasting from one week to even a few months before a loan approval and the money paid into the person’s bank account. Today we can pick up a phone and ring our bank and have the loan approved within the same day. We can even apply for a loan via the internet and gain instant approval.

Loans twenty/thirty years ago were more expensive for an individual because of higher interest rates. For example, in the eighties loan interest rates in Britain went up to, on average, 16%.

 

2) CREDIT CARDS

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A credit card is a small plastic card issued to individuals as a system of payment. It allows people who access a card to buy goods and services based on that person’s promise to pay for these goods and services.

In the sixties and seventies, credit cards were less well-known, business people or company employees and the rich used them.

Today, credit cards are now common and most individuals over the age of eighteen will get access to a credit card in their lives. Credit cards are one of the easiest forms of getting access to credit.

 

 

 

3) OVERDRAFT FACILITY

An overdraft facility is a prior agreement with the bank or account provider for an agreed amount of withdrawal below the zero balance.

An Overdraft is a loan, but one not as structured or formal. You need not have a standard repayment policy and, depending on if you meet your bank’s criteria, you can re-negotiate and extend the overdraft time and limit.

Many of our grandparents could not access a bank account, let alone an overdraft facility. They had little option but to spend the money they had available to them. This was their income or salary, there were no overdraft facility and no credit cards to depend on.

 

4) MORTGAGES

A mortgage is a loan secured against a property (a house) where you repay within a set period, twenty to thirty years.

Even as late as the sixties and early seventies, many families rented the place in which they lived in. Mortgages were very expensive and families needed large deposits to access this loan.

Within the last three decades, there has been a more lenient approach to mortgage applications. Both the government and the banks worked together to make mortgages more accessible and cheaper to the public.

They introduced three leniencies to mortgage lending, making it easier for individuals and families to gain a mortgage;

1) interest-only mortgages (a mortgage in which it only requires the person to pay off the interest that arises from the mortgage money borrowed)

2) cheaper mortgages ie mortgage, surveyor and lawyer fees became more affordable and

3) a smaller deposit needed as a down-payment for a property.

 

Credit availability has grown through the decades with requests for loans, credit cards, overdraft facilities and mortgage applications rising exponentially.

 

The RISING CONSUMER—Lifestyle changes evolution

To get a true perspective when writing this section, I had to draw on the knowledge of my older friends and colleagues along with extensive online research.

 

  1. FASHION 

I start with fashion as this is one of the major industries in the world today, bringing in billions yearly to this market.

We need the latest trends in clothing, shoes, handbags, jewellery, makeup, perfume and more.

Television advertisements promote fashion, billboards on most major street corners promote fashion, we dedicate magazines to fashion; the cat walk shows and designers launching new trends. The ‘must haves’ of the new season. We update window displays of our high street stores to show the latest designer trends.

Yet thirty years ago there was not such intense fashion marketing bombarding us from every direction.

We view fashion and the latest trends as assets. They are something that will help us land the dream job, make us feel good, or attract the perfect partner.

Wow, how times changed!

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From the sixties, fashion has become more important. However, it seemed to take off into a new level from the nineties until now in the current decade. Fashion has caused quite a few of us to get into debt trying to look good by keeping up with the latest trend. I remember not too long ago, about twenty or thirty years ago, people spent money on clothes but the fashion trends were not so fast changing.

Back then, many people bought clothes for their practicality, not just for their looks. Many mums owned a sewing machine, and either made or mended clothes for family members. This worked out to be cheaper than buying them. There were lots more fabric stores. Today it is much easier and much cheaper to buy rather than make clothes.

 

 

2) TECHNOLOGY

We now live in homes full of technology. There is new technology in every room. As with the fashion industry, the home technology and gadgets arena is a billion dollar industry. They rake in money with the continuous introduction or improvement of gadgets. We’ve become gadget crazy, these items are ‘must haves’, ‘can’t live without’ items. From the garage with its automatic doors to the security system in homes. The kitchen has the dishwasher, fridge, microwave, electric stove, etc. The living/TV room area where we spend most of our time–this room can cost a fortune kitting out.

 

Most of these items did not exist in the sixties and seventies; they introduced a few in the eighties. Some of our parents or grandparents are not even aware of these gadgets and can sometimes find them very confusing to use. For example, the computer, which is now a common part of everyday life, was not so in the sixties, seventies or even eighties where it was non-existent. Families during this period were not pressured to spend much of their salaries on these must-have technologies which today can cost a fortune.

 

Gadgets and their costs were so much simpler ‘back in the day’!

 

3) HOLIDAYS         

Holidays in the earlier decades was simple. Even flying abroad for a holiday was a thing a family would do once every two to three years, if at all. Today it is common and almost expected that we take a holiday abroad at least once a year, some people even take four or five holidays within that year period. Today taking a holiday is the norm and most everyone does it.

 

4) PURCHASE A HOME

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As discussed today, we see many young, newlywed couples buying their home within a year or two of getting married. Many single, young people take on a mortgage because it is the ‘in thing’ to own your home.

Thirty years ago, young families or newlyweds rented or lived with family members. They saved money for a deposit, which took a few years before they could purchase a home. The purchase of a home was not common unless you saved up a large deposit. The bank had strict guidelines you were to meet before they would give a mortgage.

 

 

5) WEDDINGS

Today, expensive and grand weddings are the expected practice. According to Money Advice Service, the average cost of a wedding in 2018 was £27,161. The average salary for 2018 was £33,646.

Reality check, the cost of a wedding in 2018, was 81% of a person’s yearly salary. Compare that to ten years previously (2008) where the average cost of a wedding was £15,481.77 and costed only 46% of a person’s salary.

We get an idea just how much the price of weddings has increased through the years.

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We see the rise of luxurious venues as the place for your wedding. The cost of the wedding dress and the expected weekend away for the hen night or stag do, and we find that weddings are costing an enormous amount.

This is different to our parents’ and grandparents’ time, where a wedding was a cause for great celebration but affordable. A wedding took place in the local community hall or in the family house.

What has caused this change? The access of easy money or debt has allowed many couples, both young and old, to have extravagant weddings through the use of credit cards, overdraft and loans.

 

The rise of the expensive exotic honeymoon is also common today.

Again, different to the way previous generations lived. Some of them did not take a honeymoon because they could not afford it. Otherwise they would save up for several years and take the honeymoon when they had sufficient money. It can amaze, given today’s climate, if we ask our parents or grandparents ‘did they take a honeymoon?’ that their answer is ‘NO’.

 

6) BABY INDUSTRY

How excited people get when they realise they are having a much-wanted baby. Although it is great news with wonderful emotions, today the preparation and cost of having a baby can be expensive.

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Having a baby was not as costly a process for previous generations. The items needed to raise a baby were minimal and did not cost a small fortune. Families often practiced the ‘hand-me-down’ system where second-hand baby stuff was common to use.

Today we see the rise of the ‘baby industry’. Parents now need the stroller, the pram, car seat, the baby monitor, the baby bag, the baby sling, the cot/crib, the travel cot… Do we need all this stuff? Also, do we need the prestigious brands? Babies are fast growers and some items, which we can pay hundreds of pounds for, we use for a few short months.

 

 

7) HOME REDECORATION

Redecorating our home every two to three years is common today. DIY (Do It Yourself) is big business today. We see more and more of the big DIY superstores emerge in the last decade or two, making it even easier for individuals to buy materials they need to renovate their homes.

 

If we were to visit our grandparents’ and even some of our parents’ homes, we can see the big difference compared to our own homes. They maintained the same interior in their homes for the last ten to twenty years. On the other, we have redecorated our homes at least twice in the last ten years.

 

 

 

In Closing,

Today our list of bills is so much more.

Electricity, water, phone, and rent or mortgage the essentials and we now have the mobile phone bill, internet bill, cable television bill, gym membership bill, bills for a car or two, credit card bills, insurance bills…, the list can go on.

Regular eating out and buying takeaway food, instead of the traditional home cooking, is a common trend in today’s lifestyle. Some of our older grandparents believe in home cooking being cheaper and more nutritious.

Full spa treatments, manicures, pedicures, facials and massages are also on the rise. Regarded as a luxury in past decades has now become common.No alt text provided for this image

To pay for this lifestyle.  

The sixties and seventies we saw the increase in credit facility. However, it wasn’t until the eighties it showed itself, and over the last two decades debt exploded into the phenomenon we have now.

Introducing new methods of debt, like credit cards and overdraft facilities, have assisted us in becoming a Consumerist Society.

We should ask – ‘How have these lifestyle areas affected us?’ AND ‘what can we do to be a sensible consumer?’

 

Written by Neala Okuromade

  • Qualified Accountant (FCCA)
  • Diploma in Financial Advising (MLIBF)
  • Practising Financial Coach and Author of the successful book series ‘What’s Your Financial Gameplan?’

Neala Okuromade is an experienced and reputable financial coach. Neala is taking on a new cohort of clients looking for guidance and help. Click this link for more 

Here are the links mentioned in the first paragraph – if you want further information or research to back up the analysis I gave above.

Growth of Debt / Credit links

https://www.ifs.org.uk/comms/hhs.pdf – Savings

https://www.theguardian.com/business/2019/mar/29/uk-households-spend-above-their-income-for-longest-period-since-1980s – Debt Growth

https://www.fdic.gov/bank/historical/history/167_188.pdf – Loans

http://www.theukcardsassociation.org.uk/history_of_cards/index.asp – Growth of Card Payment

https://www.worldpay.com/en-gb/insights-hub/article/the-evolution-of-credit-cards – Credit Cards

https://www.chimebank.com/2018/06/29/the-history-of-overdraft-fees/ – Overdraft

https://www.familymoney.co.uk/uk-mortgages/uk-mortgage-guide/history-mortgages-uk/ – Mortgages

The Rising Consumer through the decades

https://fashion-history.lovetoknow.com/fashion-clothing-industry/evolution-fashion-industry – Fashion Industry

https://www.bbc.co.uk/news/business-49248921 – Fashion Industry

https://www.iotevolutionworld.com/m2m/articles/376816-history-smart-homes.htm – Technology In The Home

https://www.familyholidayassociation.org.uk/blog/2016/how-times-have-changed-a-social-history-of-holidays/ – Family Holidays

https://www.historyextra.com/period/victorian/the-package-holiday-revolution/ – Family Holidays

https://www.forbes.com/sites/geoffwilliams/2016/05/31/four-reasons-weddings-are-getting-more-expensive-hint-its-all-about-the-food/#6567a4095ce7—Wedding Evolutions

https://www.moneyadviceservice.org.uk/blog/how-much-does-an-average-wedding-cost – Wedding Costs

https://www.inkwoodresearch.com/reports/global-baby-products-market/ – Baby Industry Growth

https://www.marketwatch.com/story/5-ways-ikea-persuaded-shoppers-to-spend-33-billion-2015-01-28 – Home Deco DIY

https://www.huffingtonpost.co.uk/entry/are-we-moving-to-a-world-without-cash_uk_5d0205bae4b0985c41980947?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAADw_ZFj6L3QZJVKpF59sMPgwITJyg0XW2w7XdMMIvEdwBlpaLHh4L3F1qsvgoL1VEpQHjDo-tIZQpAmPgJsRgAtP_3wwSSbjuFC95kgEyeU0Iz_-QQU9pBlAyP_H-heLqmr6dRQeRnfZ_aCxyNWnWNYWI6mfoUoN4EAiIORiNRid—Bank Statements

 

 

 

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