Budgets Are New; Hating Them Isn’t

In the roaring year 1926, a husband wrote a gleeful letter to the editor¹ explaining how he and his wife finally saved their marriage.

After years of screaming matches between Mr. Spend and Mrs. Save, they held a funeral ceremony not for the marriage, but for the budget. Solemn words were spoken. The book was cremated. “We have been free ever since,” he explained, and the marriage was never better.

Getting your butt on a budget is common fare in personal finance books. We don’t lack for good tools. The color-coded spreadsheets and online accounting software available to run a family of four today dwarfs the complexity of the account ledgers John D. Rockefeller used to become the world’s wealthiest man. We could, if we had any energy left after the kids are asleep, sit in the blue light glow of the laptop screen, assigning charges we don’t remember swiping to one of a hundred categories like “nail salon.”

Are we backsliding? Shouldn’t we be sticking to a budget the way our hardy pioneer great-great-great grandparents did?

Of course not. They didn’t have budgets back then.

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Budgets, it turns out, are new. The idea that you and your partner run a small non-profit from the kitchen table, complete with account ledgers, is a bit like cubist art: interesting, hard to follow, and entirely a product of early-twentieth-century progressives.

Like modern art, budgets changed the way families saw things, especially financial time. Was life lived daily, weekly, monthly, seasonally, or yearly? The first thinkers to recommend family budgets advised not creating one until you had tracked expenses for an entire year. This made sense for farm families, since seasonal swings and harvest payments drove toward one big annual reckoning. As people moved into cities, pay changed. Most workers got paid weekly, and some daily. Strangely, budget advocates recommended taking your yearly expenses and dividing by twelve to get monthly estimates. Monthly budgeting came decades before monthly paychecks. This decision, which we still live with today, had less to do with those who earned the pay and more with those who invented the budgets.

Modern spending plans sprang to the scene between 1900 and 1920, mostly through the advent of the newest academic college department: home economics. Progressivism was ascendant, and with it the belief that if absolutely everything was constantly counted, then leaders could bring economic forces under control. For families, this included scientific management at home.

Progressives, however, didn’t all agree on what the science said. The first wing, led by the editors of Good Housekeeping, Christine Frederick (who also invented standard countertop heights) and First Lady Eleanor Roosevelt, kept strict, accurate, and complex accounts. We will call these the “Complexity Keepers.” Frederick’s budgets had seven categories, each with corresponding subcategories. Saving, for instance, included within it two subgenres, Luxuries and Advancement. Advancement had within it a wide range of sub-subcategories² like education, music lessons, magazine subscriptions, holidays, telegrams, doctors’ visits, charity, and “toilet articles.” Others included adjustment ratios for marrying a “sedentary man” versus an active one.³ In 1969, Honeywell introduced the first computer for family budgets. The H316 Kitchen Computer would spit out recipes from your available ingredients or balance the family’s bills. The $10,000 price tag (over $90,000 today) and the two-week programing course required to use it meant that no one bought one. But the idea was out there. Budgets were so complex they required computational power.⁴

Not everyone signed on to this plan for marital harmony by budget reconciliation. “Simplicity Savers” mocked those who “budget everything down to the last string-bean.”⁵ Noting that the sheer volume of work was too complicated for everyday people trying to live their lives, they advocated simple heuristics that kept the best of budgets without the worst work. Sylvia Porter, who started out in the other camp but abandoned it as impractical, told readers to keep their records simple. Others argued that budgets were like diets, nobody stuck to them.⁶ Simplicity Savers said a family’s first act with each pay envelope should be to put something directly into savings: life insurance, banks, real estate, or investments. Then, pay necessary bills. Whatever was left could be spent as the family saw fit. Since pay usually came around every seven days, you could only make so many mistakes.

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Who handled the money? Earnings came home each week as cash inside an envelope. Who held it? Old assumptions said that men always handled the money, leaving wives to grovel, childlike, for a bit to spend from her patriarchal oppressor. Scholars, it seems, came to these conclusions not by looking at family behaviors, but by reading coverture laws. Since legally everything in the family was beneath the husband, it was assumed things worked that way on the ground. Yet housewife manuals were awash in instructions on women’s never-ending task of managing family finances. Which was it?

Two side-by-side experiences co-existed since the Revolutionary War. From the late 1700s on, there is no discernible shift from one-gendered paradigm to another in family financial management. In fact, the continuity seems to be that whoever hated keeping books the least had to do it.

Take Elizabeth Meredith.⁷ Married to a Philadelphia tanner just after the Revolution, she helped her husband build his business until they were able to sell it. He did the physical labor, and she kept the accounts. In fact, when she took over the books it quickly became apparent that her husband had no gift for it, and the whole enterprise was “so deranged and it was impossible to tell where to begin.” Her husband was a good tanner but a mediocre businessman, whether because of “blunder or error” it was hard for her to say.

Meredith righted the ship. She was a sharp small-business owner. She kept pressure on suppliers, took on boarders for extra income, negotiated bank loans, and was ruthless with overdue payments. She and her husband did very well, slowly building a profitable business and investing the proceeds into rental real estate.

Credit agencies in the 1840s recorded multiple instances across the country of women being the better financial managers in a family business: “His wife is the manager & much better for bus[iness],” “his wife is now the business man,” or “Her husband . . . is a sort of ‘shop boy’ for her,”⁸ were not irregular notations.

Female financial oversight was not simply a “Break glass in case of male incompetence” emergency-response mechanism. Many families delegated the role of money management entirely to the wife. Lydia Maria Child put a great deal of ethical emphasis on women’s skills at keeping expenses below income. Frances Green’s 1837 The Housekeeper’s Book⁹ began with instructions on account keeping. “One branch of domestic duty which devolves upon the mistress of a house, is to keep account of the expenditures of her family,” she taught young brides.

Many women loathed this wifely duty. Budgeting did not empower early American women to live their best lives now. It drained them. Account books were a time-consuming and isolating task, done not with friends, but alone at the family desk or kitchen table.

Across the nineteenth and twentieth centuries, families were split roughly between allowances systems doled out by the husband and many other families who left the entire responsibility of money management to the wife.¹⁰ Most families treated the family budget less as a sphere of gendered power to negotiate and more as a dreaded chore foisted upon one spouse by the other.

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To make the budget work, someone had to curtail spending on something. That was never easy. Early Americans swam in a sea of stuff to buy. Colonial Boston had 500 shops for only 16,000 people, a higher ratio of stores-to-shoppers than Bostonians enjoy today. Consumerism ran so rampant that a preacher in Connecticut convinced anxious sinners to save their souls by purging idolatrous finery. Congregants piled up their imported “Scarlet Cloaks, Velvet Hoods, fine Laces, and every thing that had two colours.” Standing beside the big pile of sin, the minister shocked the crowd by stripping down naked and throwing his clothes on top. Something about a bare-assed preacher getting ready to burn all their things jolted the crowd to their senses, and they rushed in to save their treasures. Americans have preferred retail therapy to repentance for a long, long time.

What really kept American spending in check was how expensive everything was. Your budget, no matter how tight, is skewed toward fun and frivolity in a way your great grandparents could only dream. People didn’t buy less than us today because they had more will power. They bought less because basic items cost much more. In our world of plenty, we are utterly disoriented to how cheap it is to live a modern life.

As late as the 1870s, families spent over half of their total income on food.¹¹ Just food. Another 25 percent went to rent. Fifteen percent went to clothing, or more precisely cloth and thread, which women then turned into clothing. Add that together and just 10 percent of the average working family’s budget remained for everything else. Tuition, medical bills, leisure, savings: these were afterthoughts. All of life, for most of life, was about surviving.

Then that changed. By 1940, the cost to feed a family was cut in half. Today, even after inflation hit, the average family spends 12 percent of their income on food, a great deal of it at Chipotle. The same happened for clothes. Even before the rise of falls-apart-fast-fashion websites, by the early 2000s most families covered their nakedness for less than 3 percent of income, preachers included.

Hacking abundance to power our savings sounds logical enough. When so much cost so little, why not live for less and invest the rest? Take The Latte Factor,¹² an instant New York Times bestseller that explained how to find the hidden Platform 9 ¾ to your retirement dreams. The magic comes from skipping Starbucks each day. Drop the money from a daily grande, half-caf, extra-hot, oat milk, sugar-free vanilla, upside-down caramel macchiato into an index fund, and you’re rich in barely thirty years.

An 1872 book made the same point, except with beer.¹³ A man making the lowest market wage could still save an incredible 25 percent of his income. To do this, he must commit to skipping three beers a day and investing the savings. Wait twenty years and you, too, could buy a farm by forty.

To understand the logic, you must know two things. First, as I mentioned, everything used to be more expensive. Second, which I forgot to mention, Americans are much less drunk than we used to be. Before Prohibition, Americans spent 4 percent of gross domestic product on booze. Today it is less than 1 percent. In the 1800s, each person drank about seven gallons of alcohol a year.¹⁴ Today, we drink two. The booze budget wasn’t as crazy as it seemed, and the chances the worker earned more sober were high.

Booze, tobacco, cars, and a host of other “bad habits”¹⁵ were featured in “how to save more” guides from the nineteenth and early twentieth century, well before anyone decided to make cappuccinos the main villain. One of the earliest appeared in 1867 ads for the Freedman’s Bank, just after emancipation, urging former slaves to forgo tobacco and alcohol to save an extra ten cents per day. In ten years, with compound interest, sober savers would have $500 to buy their own land. The bank tragically failed before anyone could prove the theory true (it turns out compound interest really is overrated).

Regardless of who kept them or what they cut out, budgets and spending plans were optimistic documents. They projected a future that could be better than the past: a life better than your long-suffering parents’, less chancy than your hard-partying neighbors’, or more hopeful for ambitious kids. Families could dream, in pencil and paper, of a financial future for themselves. Vacations and college funds, all far away, became real on the page.

The problem, of course, is that optimism can be hard work. What with all the dreaming and saving and watching the neighbors get new drapes or the work buddies chug oysters and beer. To Progressives’ chagrin, many families navigated life in capitalism just fine without detailed spending plans. A 1920s survey reported that only one in four families followed a written budget, and 60 percent kept no records at all. The ability to save between those who did and didn’t differed . . . by merely 1 percent. Far more families reported “avoiding liquor”¹⁶ as their most powerful tool for financial success.