Econ prof stresses responsible spending
By CHRISTOPHER DIEM, Journal Staff WriterCheck out the video in Video Exclusives!
MARQUETTE - A Northern Michigan University professor spoke Tuesday about the state of the economy, both locally and nationally, and had one clear message: the sky is not falling.
Tawnie Hunt Ferrarini, an associate professor of economics at NMU, said there is some financial instability in the country but it's not nearly as bad as the media portrays it to be.
"I refuse to believe the sky is falling," she said.
Ferrarini said average incomes in the country are rising and historically have never been higher.
"If not spending on goods and services today we are saving, or we're postponing to spend in the future," she said. "Consumption per person in the United States is rising. We are buying more goods and services, more cell phones, more cars, more clothes."
Ferrarini said the problem is that the average savings rate is falling.
"We're not preparing ourselves for uncertain times in the future and this is placing us in a financially insecure position," she said.
In addition, she said the rate of households extending beyond their financial means with credit cards has steadily increased since 1970.
"Not only are we earning more and spending more of what we earn, we are extending ourselves and taking out credit to do so," she said, adding that the rate of debt left on unpaid credit card balances has also increased.
Ferrarini said the key to turn this trend around is to start saving strategically.
"Go to somebody who has some experience who can look at not only your assets but also your liability and set a plan out for yourself," she said.
She said recent generations are more concerned with instant gratification and may not fully realize the importance of saving for the future.
In contrast, she said there are still a generation of Americans who lived through the Great Depression when they were young who were taught how to save and how to invest.
She said those lessons need to be taught to today's generation in order to avoid a financially insecure lifestyle.
