Managing Your Money : Capturing an Elusive Virtue : Thrift

Thrift, like fidelity, seems a hopelessly old-fashioned word today, redolent of starched collars, high-button shoes and ads in which a long-ago banker, in equal parts kindly and portly, gratefully accepts a few coins from a child making his first deposit. Say a regretful goodby to all that.

Nowadays, the banker would give the kid the back of his hand; too much overhead on these teenie-weenie accounts. Get lost, small fry. Nowadays, the word thrift survives in the public lexicon mainly cloaked in irony, as the name of an industry dotted with the burned-out shells of savings and loans that stole the kid’s money, ate it up in salaries, perks and decor, or loaned it to developer cronies who then went bust. Nowadays, thrift is the forgotten virtue. Many of us don’t even teach it to our children anymore.

But if it has no public presence, thrift as a private virtue endures. And a good thing too, for thrift signifies a lot more than the simple inclination to save for a rainy day or a vacation in the south of France.

Thrift is a marker, a manifestation of a whole complex of still greater virtues--moderation, reason, self-discipline, maturity--that together make for far more than a mere bank balance. They make for a strong and stable life.

For thrift is most of all a sign of character. The kind of life it yields is hard enough to fashion in the best of times. It is that much harder when the surrounding polity is geared only to the infantile I-want-it-all-right-now way of living.

Worse yet, thrift is not just old-fashioned. Today, it’s unpatriotic.

This would be denied with horror by every public person, but don’t be fooled. Never mind the fretful noises, like the whimperings of a puppy locked in the garage, that you hear from Washington now and then on our collective lack of thrift. “Gee, why don’t we save more?” they ask. “Look at the Japanese.”

Well, there are sound reasons why the Japanese save more, but the important thing is this: Few of the people exhorting us to frugal exertions really mean what they say.

The U.S. economy--and with it the political system--is two-thirds driven by consumer spending, and it matters little what that spending is for, so long as it keeps growing. Which is to say that business and government depend on and encourage not thrift, but profligacy.

The result is a society in which the undisciplined endlessly pursue the unnecessary. Getting it on easy credit, they find little satisfaction and so hungrily go out to buy more. They don’t even have to leave home; just tune in a shopping channel or browse through catalogues stuffed with such essentials as brain-wave synchronizers, electronic foot massagers and stair-step exercise machines. (Is it now impossible to find anywhere a flight of ordinary stairs? Have the owners of America’s staircases begun charging tolls?)

In David Macaulay’s book “Motel of the Mysteries,” archeologists in the distant future unearth a 20th-Century motel and draw hilariously inaccurate conclusions about that ancient culture from such bizarre artifacts as toilets and TV sets. What might they conclude had they tunneled into, say, a Sharper Image outlet?

Now consider what would happen if thrift were a prevailing spirit. Thrifty people save for things, meaning they are less likely to buy a lot of junk in passing. When they get what they save for, their exertions give that item a hard-won value, and they maintain it well and make it last. This is very bad for business. If everyone were thrifty, the economy would deflate like a punctured zeppelin.

That, of course, is the paradox of thrift, Keynes’ Depression-era observation that if the economy is at death’s door, the worst thing everyone can do is save.

That’s one thing we don’t have to worry about. Today, practically anyone who can fog a mirror can get a credit card. How many people are such disgraceful deadbeats that they do not find in their mailboxes practically every other week a letter that begins: “Congratulations! Because of your outstanding credit record, you have been preapproved . . . “

Government policy is more ambiguous; Washington does not want to believe that it is abandoning thrift, to which it still pays lip service and sometimes more (removing the tax deductibility of most interest payments at least removes a subsidy to spendthrifts). But on balance it is strongly tilted toward profligacy. The national debt is huge and growing. Savers get no incentives for savings: dividends are still double-taxed, and most of the advantages once attached to individual retirement accounts have been amputated.

In such a hostile climate, then, what’s a thrifty person to do?

First, work the system by making the profligates pay your way. To cite just one example, you can easily get a no-fee credit card. By paying any balance immediately, you get to use the bank’s money for a month, besides free rental-car and in-flight life insurance, replacement of stolen goods and other benefits. The people who put themselves into hock with the card issuer pay for all this.

And the miracle of compounding is unchanging. Invest $1,000 today at 8% for 100 years and leave $2.2 million for posterity. Inflation will take some, just as parasites get part of any crop. But that doesn’t make it not worth planting.

The greatest rewards of thrift are not financial, though. If none of these existed, thrift still would be worth practicing, just for the discipline. The thrifty person might even welcome the opposition of the culture he lives in, because this only gives the will more bracing exercise--and makes one’s patient accomplishments the sweeter.

“And so it is throughout,” wrote Montaigne, that most moderate and sensible of essayists. “Difficulty gives value to things.”

Tips

Hints on Salting it Away:

* Decide on some savings goals. One rule of thumb is to save 10% of pretax income.

* Create a mechanism for saving. For example, have your bank or credit union automatically transfer a portion of your paycheck into a savings account.

* Make a record of each expenditure you make one month to determine what discretionary spending can be reduced or eliminated to save more.

* Pay off credit card debt. Interest payments on savings and investments dividends generally do not offset the high interest that many credit-card companies charge.