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Economic Woes Make Us Desperate, Not Thrifty

Credit Cards
Credit Cards

There's an idea that's been making the rounds on the internet, that the upside of the current recession is that it will teach us to live within our means. I don't buy it. The notion that an economic downturn will cause us to give up putting money on our credit cards and rediscover the virtues of saving may seem intuitive. But when you give it a closer look, it doesn't make any sense.

You might call the current financial crisis my generation's first truly formative economic experience. I sincerely doubt that it's teaching of us to be more thrifty.

Why? Because this recession hurts both the deserving and the undeserving alike. If you've assiduously saved up a lot of money and invested it in the stock market, what's happened? You've seen your savings get annihilated.

At the same time, if you lose your job and can't find another one anytime soon, does that really teach you to live within your means?

It may force you to. But think about it like this: if you're newly unemployed, the difference between having some money saved up and having a lot of credit card debt is just one of time. The time it takes you to go through all the money you have or can borrow in order to support yourself.

If you don't have a job and you're in your twenties, you'll just eat through your savings. And when that's through, believe me, you'll be sorely tempted to put whatever you can on your credit card for however long you can get away with it.

So is this recession really teaching us that it's important to live within our means? I think the real lesson that anyone who's hurting financially has learned is this: Your personal finance habits don't matter that much because there's just not that much you can do to protect yourself from the systemic risk in the system. And maybe we're also learning that credit cards are a great way to get through tough times. That's a lesson I'm fine with, but most personal finance scolds wouldn't be.

Economic hardship doesn't make us better at managing our finances, it just makes us desperate. And, frankly, I find any suggestion that this downturn is a good thing because it will make us more "virtuous"

when it comes to our money pretty heartless. That's the same thing the British Parliament said about the Irish potato famine, and history doesn't look kindly on those guys.

Questions? Comments? Send them to millennialmoney@cnbc.com