Writing about the “new normals” brought on by the Great Recession has become, well, a new normal for many media outlets. Adding to the conversation, Fortune magazine has come up with five new normals that it believes really will stick. Here they are, along with my thoughts.
1. Long-term unemployment. For those who have jobs, my hope is that one new normal will be continuous learning. That means everything from taking classes to keeping up with the latest books in our field. While there’s no such thing as guaranteed employment, there’s much we can do to stay as employable as possible. A good starting point is to be the absolute best at what we do.
2. Renting over owning. I believe the appeal of home ownership will persist, but I hope the new normal will be that homebuyers make smarter decisions about how much house they can afford. I advocate a 20 percent down payment and a monthly housing payment (mortgage, taxes, and insurance) that requires no more than 25 percent of household gross income.
3. Saving over spending. I have my doubts as to whether this one will stick. I sense that when the jobs picture finally improves, people’s pent up desire to spend will be unleashed. In order to spur savings, my hope is that automatic enrollment will become part of the new normal for workplace retirement plans.
4. Staycations over vacations. See point three.
5. Higher taxes for the rich. My guess is we’ll see higher taxes for everyone in one form or another.
A sixth new normal I’d add to the list is the use of a household budget. Online programs and mobile apps have made budgets easier to use than ever before. If household budgets become common, that will be one of the best long-term impacts of the recession.
What do you think about the new normals listed above? What others would you add to the list?
Couldn’t agree more, Larry.
A hoped for new normal will be the realization that the government does not have unlimited resources and cannot solve every financial problem.