Many of today’s wealthiest people still follow financial principles from the 1950s. While times have changed dramatically, certain old-fashioned ’50s money rules remain as powerful as ever when building enduring wealth.
Let’s explore some of those hidden 1950s money lessons that continue to make people rich today. By adopting these timeless principles – even if they seem quaint or obsolete at first glance – you, too, can put yourself on the proven path to financial success and security.
1. Live Below Your Means
The 1950s were a time when frugality and thriftiness were highly prized values. Avoiding lifestyle inflation and living modestly within one’s means was the ethos of the day. There was no “keeping up with the Joneses” or stretching your budget to impress others with flashy spending.
A famous modern example of this lasting wisdom in action is Warren Buffett. The legendary investor still resides in the modest Omaha house he bought in 1958 for a mere $31,500. While he could easily afford the priciest mansion, Buffett knows wealth is better built by living simply below one’s means rather than frittering money away. To apply this in your life, focus on consistently spending less than you make. Create a budget, distinguish between needs and wants, and avoid taking on high-interest debt for discretionary lifestyle purchases.
2. Pay Yourself First
In the 1940s and ’50s, George Clason’s famous personal finance book The Richest Man in Babylon widely popularized the notion of “paying yourself first.” Clason argued that to build wealth successfully, you should set aside 10% of your income for savings and investing before taking care of any other expenses.
By paying yourself first, you prioritize your own financial future and security rather than just paying the bills. The key now is to automate your savings transfers each payday so that it becomes an ingrained, painless habit that keeps money flowing into your wealth-building accounts. If you wait until the end of the month after all other expenses, odds are there will be nothing left to save. So make sure you always pay yourself first.
3. Don’t Try to Keep Up with the Joneses
The 1950s emphasized being content with what you already had rather than constantly comparing yourself to others and trying to outdo their visible spending. It was an era before the intense modern pressures of social media and lifestyle creep.
Today, it’s easier than ever to fall into the trap of keeping up with and trying to outdo friends’ and neighbors’ bigger houses, nicer cars, lavish vacations, and overall consumption. But as the 1950s understood, that’s a surefire recipe for overspending, dissatisfaction, and financial strain. Instead, focus on your specific goals and personal finances – not anyone else’s. Define what success and happiness mean to you, not society or Instagram. Ignore what others happen to be buying and spending.
4. Make Your Money Work for You
The 1950s saw a substantial increase in stock market and mutual fund investing by everyday individuals. More people began to realize that over the long term, owning appreciating assets was a far better way to build solid wealth than parking cash in a savings account.
The incredible power of compounding investment returns came to the forefront. The basic idea is that your money makes more money, which then makes still more money itself in a virtuous cycle that gains momentum over decades. So start putting your money to work for you as early as you can and keep it invested for the long haul. Avoid fads, tune out market timing, and invest steadily, through thick and thin, in proven assets for the future you want.
5. Maintain a Rainy Day Fund
Another Depression-era and 1950s financial lesson that’s still hugely relevant is the importance of having liquid emergency savings on hand. Life has always been and will always be unpredictable. Unexpected expenses like medical bills, car repairs, or job losses can arise out of the blue at any time.
By maintaining an easily accessible rainy day fund of 3-6 months’s worth of core living expenses, you provide yourself with a crucial financial buffer and safety net. It prevents having to go into debt or sell off assets at losses when inevitable rough patches strike. Keep your emergency reserves in a safe place, like a high-yield savings or money market account, so the funds are there when you need them.
Case Study: Lindsay’s New Money Mindset
When Lindsay first started learning about personal finance, she had never really considered where her money went each month. Although she made a decent income, she always seemed to be living paycheck to paycheck with little to nothing left over for saving or investing.
One day, a friend recommended she read a blog post about “1950s money rules that still work.” Intrigued, Lindsay checked it out and had an aha moment. It was like a lightbulb went on – she realized that if she wanted a more financially secure future, she needed to change her whole approach and relationship with money. Lindsay first set a goal to start “paying herself first,” putting aside 10% of her paycheck into a new savings account she opened. She also combed through her spending and identified ways she could painlessly cut back a bit to live more below her means. Instead of constantly comparing herself to what friends and fashion influencers were buying, Lindsay began ignoring all that noise and focusing on her own goals and priorities.
She also downloaded an investing app that lets her quickly buy low-cost index funds and build a diversified portfolio for long-term growth. Lindsay even set up a separate rainy day fund so she knew she had a cushion no matter what unexpected expenses came up. While imperfect with her new money habits, Lindsay started seeing her wealth steadily grow for the first time. More importantly, she felt greater control and peace of mind about her finances. By adopting a 1950s money mindset, Lindsay put herself on a whole new financial stability and success trajectory.
Key Takeaways
- Live by frugal means rather than trying to keep up with the Joneses.
- Pay yourself first by automating minimum savings of 10% of your income before other expenses.
- Focus on your financial goals and priorities, not everyone else’s visible spending.
- Ignore fads and steadily invest your money for the long term in proven assets that appreciate.
- Understand and leverage the power of compounding investment returns to build wealth.
- Maintain 3-6 months of liquid emergency savings to buffer against unexpected expenses.
- Be content with what you have rather than constantly comparing yourself to others.
- Avoid high-interest debt for discretionary lifestyle purchases that cause financial strain.
- Start putting your money to work for you as early as possible so you can reap the benefits of time.
- Make wealth-building a habit by practicing key principles like living below your means and saving.
Conclusion
While the 1950s can seem like a distant and out-of-touch era, many of the money principles that guided that decade are still immensely powerful and practical today. By embracing time-tested rules like living below your means, paying yourself first, avoiding keeping up with the Joneses, and investing for the long haul, you’ll be well on your way to lasting financial success and security.
Implementing these principles consistently isn’t always easy, especially in today’s consumerist, instant-gratification culture. It requires discipline, patience, a long-term perspective, and a willingness to withstand the temptations of comparison and lifestyle creep. However, as the experience of many of today’s self-made millionaires and billionaires shows, embodying this 1950s money ethos is more than worth it. Committing yourself to these proven fundamentals places you on the surest possible path to building the wealth and financial freedom you deserve.
