After a generation where "me, more, now" was how we thought about our money, it's time to walk through these five retro rules when you are about to part with your money.
1. If you don't need it, don't buy it. If you can't afford it, put it down.
It's as simple as that. It's heartbreaking that for millions of Americans, this is not even a choice they can make -- they don't answer the phone because a bill collector could be on the other end. The question of whether they can afford to buy something has already been made for them: Their credit cards are over the limit and they can't spend money and the fees pile up. But for anyone with a little left over at the end of the month, every dollar has a purpose -- to build for the future.
Ask the three key questions before parting with your cash. "Do I need this?" "Will it make my family better, smarter, more prepared?" "Can I even afford it?" Only you know the answers to those questions. And just asking them gives you pause to evaluate whether the dollar buys you an experience and an investment in your family and your future.
2. Think of money like nutrition.
Is a purchase, whatever it is, something that is good for your body, or nothing more than a sugar rush? I'm often astonished when people spend so little attention to their spending, yet they are religious about their workouts and nutrition. Isn't it the same thing?
You're only given one body and one life to live, and you want to treat it like a temple. Prolific and random spending is the money equivalent of eating junk food. It might feel good at the time, but it hurts you in the long run and limits your options later in life.
3. Negotiate everything.
It seems gauche to call it haggling, so let's call it negotiating. Your cell phone company, cable provider, car rental company and even your doctor need your business. Politely ask if there are discounts. For travel and leisure, inquire about a complimentary upgrade if they won't drop the price. (Vacations have never been more attainable. If you can afford them, this is a good time for breaks and discounts.) If you are polite and informed, you will be surprised.
The number of elective surgeries has fallen off in the past year and a half, either because it is not covered by insurance, the co-pays are too high or the patient doesn't want to be out of work. Make a deal with your doctor.
Do the same with the dentist. Need a root canal? Ask about complimentary teeth bleaching.
Dr. Jacques Moritz, director of gynecology at St. Luke's Roosevelt Hospital in New York, says you'd be surprised how much wiggle room you have at the doctor's office, especially if you don't have insurance.
He suggests saying, "I'd like to pay the lowest rate you give an insurance company." The doctor appreciates knowing the check is coming right out of the patient's pocket. And the doc won't have to deal with the bureaucracy of the insurance companies.
"If you want plastic surgery, this is the time to do it," Moritz says. "It's on sale. Also, when it comes to medical necessities you can ask, too. It's a service industry. Services are negotiable."
Plastic surgery, of course, is a luxury that won't fit in most family budgets, even with good planning. But more people put off elective surgeries of all sorts during the recession because they can't afford the out-of-pocket expenses. This is negotiable, too.
You can find savings in some of your biggest expenses -- car insurance, medical bills and travel. Where there will be no negotiating and no mercy -- credit cards.
New protections are in effect to save you from the most egregious card practices, but if you are charging things that you can't pay for, expect high interest rates. And as soon as you are late on two payments in a row, your protections vanish and the fees kick into high gear. Gone are the days of negotiating with the credit card supervisor at the other end of the phone line to erase a late fee "just this once."
4. Always save first.
For several years, the savings rate in this country was negative. That means month after month, quarter after quarter, year after year, we spent more money than we put in the bank. (Economists justified this by saying the savings was in our house or in our stock accounts, not in the bank, and this was actually a sign of great progress for middle-class families. It was an economic assumption that proved wrong.)
At the peak of our newfound thrift in 2009, we were saving around 5 percent to 6 percent of the money left over after we paid taxes. A few months into 2010, that savings rate was slipping a bit -- more like 4 percent was going into the bank.
Do you know how much you are saving? Look at your pay stub. Calculate how much money you bring home after taxes. Make sure you are saving at least 6 percent and hopefully 10 percent of that for your future. Save first.
One viewer, Brian in Florida, is conservative with his money (and his politics) and wants to take no chances relying on the government to help him in his old age. He budgets 20 percent of his gross annual pay to savings and retirement. "6-10 percent is the minimum. And not including Social Security or home equity."
Jennifer is a mortgage loan officer in Texas who can't see how anyone in their 30s and younger will be able to retire on Social Security, so she's saving 15 percent of her family's income for retirement.
"We're assuming we won't have it or they'll phase it out for those who do have money in retirement funds. We're at 15 percent, but would love to be able to bump it up more! Gotta pad that college fund for the Girl before we bump it up to 20 percent, though."
The girl, of course, is her elementary school-age daughter, and she observes the cardinal rule of personal finance -- saving for her own retirement first before tacking the college fund.
5. Don't deny yourself.
Thankfully, this is not the Great Depression, and we are not Depression consumers and don't have to be. We love to buy things: It's been a defining American trait for half a century.
As confidence in the economy returns, the people who have the cushion to spend money will be critical to restore the economy. Every dollar spent at the pizza parlor, on video games, at the zoo sustains jobs. No one believes we are headed into a period of Post-Aughts Austerity, or that we should.
Too much austerity and we choke off the economy and kill more jobs. But the bubble behavior -- the wild, unchecked spending with borrowed money for big houses, piles of imported plastic consumer goods -- has popped.
Smart consumers don't live like it hasn't. They know the difference between needs and wants. For God's sake, don't buy something stupid. Even a $25 impulse buy is money that could grow in a 529 college fund.
The key is to know what you can live without.
The message for anyone struggling with money: The only thing you can control right this second is how the money leaves your hands.
Of course, one person's frivolous expense is another person's investment. It's why I am such a fan of making lists, setting targets and marking them off. Every person's list will be different.
It's silly to say: "Ditch the Starbucks and you can save your way to financial security."
If the Starbucks is a small expenditure that is part of your ritual that makes you happy and more efficient and focused at work, then by all means, keep it. If gourmet food-store lunches are an impulse buy, then get rid of them. You are allowed to have "wants" and not just "needs" on your shopping list.
Make strategic sacrifices and you don't have to sacrifice too much in your standard of living.