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(Published: 2009-12-16)

The holidays are upon us. The airwaves are flooded with Christmas carols and stores are filled with shoppers. Retailers are discounting, e-tailers are coupon-ing, and shippers are shipping. Moms are baking, and school kids can’t wait for vacation.

The holidays are upon us. The homeless wander the streets, and shelters are filled with people that have lost their jobs and their homes. Banks aren’t lending, credit card companies are raising their rates, and emergency wards are filled with the uninsured sick. Mothers wonder how they will feed their kids, and shut-ins desperately hope for a visitor.

I hope the first scenario is true for all of you. But we all know that the second scenario is all too real. Let’s hope that the economic outlook continues to improve as we enter a new decade.

This recession has had a big impact on our psyches. We’ve all tightened our belts significantly. What we want and what we need is being reevaluated. The unsustainable practice of ever-increasing consumption of physical goods and expressing ourselves through what we buy is fast being replaced by a new set of values.

That means we’re going to be seeing a whole lotta less. Here are some interesting statistics. The rates of growth in average home size and family car ownership in the US have been roughly halved since 1990. The square footage of an average US home is now back down to below 2004 levels. Our McMansions are feeling too cluttered with too much stuff, and the average number of cars per household is declining.

The New York Times says that getting onto someone’s gift list this year is like getting past a velvet rope, and that even fruitcake is being rationed. To many, buying more ‘stuff’ just doesn’t make a lot of sense.

We’re entering an era of “The New Frugality.” Lest you mourn, here are some insights from Chris Farrell, the economics editor of Marketplace Money, on MPR radio. He’s the author of “The New Frugality: How to Consume Less, Save More, and Live Better.”

Chris points out that our standard of living increased over the years largely because we became two income households. Many households have since lost one (or more) of those jobs, which means it’s going to take time for consumers to work off the debt that accumulated during the free-spending years.

Chris and I agree that frugality isn’t a fad. He expects to see a major shift in spending, borrowing, and savings behavior. “Everyone,” he says, “has learned the hard way that their own personal safety net was too frayed.”

He believes the memories will linger long after the recovery is in full swing. “The generation that lived through the Age of Inflation learned it was smart to borrow. They continued to borrow big even after inflation was tamed. The generation living through this Great Recession now understands it’s financially dangerous to carry too much debt, a lesson that will shape our finances for years.”

Chris is careful to point out that frugality and cheapness are not the same. He describes the frugal as “conscious consumers that try to be mindful of the ecological and social effect of their purchases and activities.” He goes on to say that long-term, people will put a higher value on “a home-cooked meal, an over-50 hockey game on a frozen pond, and a 30 mile bike ride to raise money for a cause.”

So, while we may be seeing a whole lotta less when it comes to pay, size of our homes, and gifts under the tree, here’s a countertrend to be thankful for.

The holidays are upon us. We’re saving more, giving more thoughtfully, and consuming more carefully. Families are eating together around the dinner table, and kids are playing….with each other. Homes are filled with peace of mind, hearts are filled with appreciation and gratitude, and visions of a better life dance in our head.

An old Finnish proverb says that happiness is a place between too much and too little. Maybe a whole lotta less is just what we all need in order to be a whole lot more happy.

Happy holidays!

Chris Farrell's book

Peace of Mind

Robyn Waters is president and founder of RW Trend, LLC. She is the author of The Trendmaster’s Guide: Get a Jump on What Your Customer Wants Next, and The Hummer and the Mini: Navigating the Contradictions of the New Trend Landscape. Learn more about Robyn at All Rights Reserved.

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