If someone handed you seven hundred dollars out of the blue, what would you do with your modest windfall? Would you take a day trip, treat your significant other and yourself to a very expensive dinner, or scoot over to Las Vegas and hit the crap tables? Or would you do something very practical and boring – say, pay for a needed repair, or catch up on a credit card bill?
As in so many aspects of modern life, psychologists have weighed in. In a Psychology Today article last year, Amie M. Gordon writes that we’re better off spending our cash on experiences rather than things. Citing research by psychologist Leaf Van Boven, Gordon suggests experiences make us happier than things. With the former we can continue to enjoy positive memories, whereas with the objects we purchase, either they wear out or loses their novelty.
But a turn of events even the most astute psychologist failed to predict is that the American consumer, instead of buying vacations or cars, would choose to hoard their cash, even in what they’re being told is an improved economy. Even with a bump in pay and drop in gas prices to the tune of an extra seven hundred dollars a year, consumers still aren’t crowding the malls and spreading the cash around.
It seems Americans hurt by the Great Recession are now afraid to let go of their cash. According to a recent article in The Washington Post, there’s evidence the consumer mindset has made a fundamental shift from the optimistic take on the economy we held previously during previous periods of relative prosperity.
It’s as though the government is now saying, “Go ahead, it’s OK to spend,” but consumers are refusing to buy the hype. But it’s more than mere refusal. According to a survey last year by American Express, twenty-nine percent of consumers admitted to holding some savings in paper money and coins. Fifty-three percent are keeping their cash in a secret location. Many are keeping their stash in the mattress; still others are keeping it in the freezer. (An editorial note of caution: a friend recently experienced a break-in at her home and the thief emptied out her laundry hamper in search of cash. While she kept no money there, apparently this is a well-known hiding place, so exercise both caution and imagination if you must hide cash in the house).
I can certainly appreciate why some folks would be hesitant to indulge a spending spree after being gutted by a recession that spared virtually no one. But let’s face it – if the government doesn’t trap you via an induced spending spree, it’ll get you through currency debasement. Since gold is up sixteen percent this year alone, why stash currency only to watch its value erode? If you must store anything, think about gold coins.
Gold is the one asset that doesn’t disappoint. Unlike stocks, gold can’t plummet in value because the CEO of a company made a stupid decision or because that company’s management suddenly got blindsided by a competitive product.
So don’t let a politician or a hired gun economist tell you what you “should” be doing with your money. The government’s numbers game is about their well-being, not yours. If you’re fortunate enough to have a bump in pay, or some other extra cash, attend to your personal wealth. Gold tucked in your home safe, outside depository or even your retirement fund makes for a far better night’s sleep than dollars stuffed in your mattress.