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SALT LAKE CITY – Despite the low unemployment rate, Americans are still feeling the effects of inflation, the cost of living and general fiscal pain. It leads to the question: “Are you better off now than you were four years ago?” In the year That’s what former President Ronald Reagan asked during a presidential debate in 1980.
Let’s expand that question to more than one president. Given the inflationary struggles the world faced last year, are we better off now than we were 40 years ago? In the 1980s?
“Yes, as a community, I believe we are,” said DMBA Certified Financial Planner Shane Stewart. “When you take everything into account and look at what the average family could afford in 1985, that family is better off today than it was then.”
Inflation, cost of living is changing our lives.
In the 1980s, the two-car family was not as common as it is today. A two-career family was rare. Now for many people, Stewart explains, it feels like a necessity.
“The lifestyle has jumped because now we’re saying, ‘Well, I’d rather have two jobs to maintain that rich lifestyle than the living lifestyle.'”
The difference between inflation, the cost of living and the cost of prosperity
The cost of living only covers the basics. It is the cost of rent, food and transportation. Stewart called the “cost of prosperity” more than luxuries such as travel.
“I see the younger generation, the younger families traveling today,” Stewart said. “I’m thinking, when I was their age, I didn’t travel much, I didn’t have the money.”
So the concept of prosperity today requires more money to do more things than it did two generations ago.
Everyone says ‘I’m worse’
When you ask people if they are doing better today than they were four years or 40 years ago, most will say, “No.”
“He believes that people born in the next generation are not doing better than they were a year ago,” Stewart said. “That’s why Ronald Reagan’s question was a great political question. The answer to everybody is, ‘No, I’m not.'”
But perception doesn’t always match reality.
“Statistically, maybe you’re better,” Stewart said, “but you don’t seem better.”
He called it the law of scarcity.
“Where you feel like you don’t always have what you need or want, when is actually possible,” Stewart said.
Stewart says he tries to get people to focus on the “law of sufficiency.” The question you ask in this rule is, “Have you had enough?”
“The human mind doesn’t work that way,” Stewart said. “I have good things, but not enough,” he says.
Every generation complains about inflation, cost of living.
One of the most common complaints people hear today is inflation. You can’t buy eggs, gas, or cars. Is this a special challenge for us in 2023?
“No,” said Stewart. “Every generation faces the fear of inflation. . . . This is no different than what we’ve seen in other years.”
There is a fundamental misconception about inflation.
“A healthy economy means it’s growing,” Stewart said. “It’s just like your car’s tires. It has to be inflated properly.”
If the economy is low, like your tires, it’s hard on the system. If properly inflated, it works beautifully. “The problem is hyperinflation or overinflation,” Stewart said. “If it grows too fast, it’s hard to stop, then everything becomes too expensive.”
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