Merriam-Webster named Austerity as the word of the year in 2010, but these days it isn’t a word we use often. Dictionary.com defines it as 1. austere quality; severity of manner, life, etc.; sternness. 2. Usually, austerities. ascetic practices: austerities of monastery life. 3. strict economy. I like the definition of Financial Austerity from Wikipedia: is a policy of deficit-cutting, lower spending, and a reduction in the amount of benefits and public services provided.
MoneyEducate.com’s definition:
Family austerity: change in fiscal policy of a family to substantially reduce spending in response to: 1. deficit spending (spending more than one earns), 2. excessive debt, 3. unfortunate circumstances (e.g., job loss, investment reduction), 4. negative economic factors (increase costs of food and gasoline), in an effort to ultimately avoid bankruptcy, lower financial stress, re-pay all non-mortgage debt, build wealth and give. The non-financial consequences of austerity are enjoying less wants, but enjoying maturity, more quality time with good friends and family and spiritual growth.
Unscientific numerical and graphical result I imagine would look something like the following, the percentages could be adjusted according to severity of deficit and mathematical proximity of bankruptcy:
75% Reduction in expenses
- Entertainment such as eating out, movies and spectator events
- Vacations and travel
- Extra children’s activities
- Regular new clothing
- Gifts
75% Increase in investments
- Debt reduction
- Possible mortgage or car loan reduction through downsize or refinance
- Savings
- Giving
100% time increase for activities
- Budgeting and expense tracking
- Spousal financial meetings
- No/low-cost family activities
- Introspection and spiritual pursuits
- Taking financial courses and reading financial books
- Receiving counsel
100% increase in personal growth
- Maturity & personal growth
- More joy, happiness and contentment
- Closer family relationships
- Financial skills passed on to children
If you charted this on graph it might look something like:
