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Michigan has become poorer over the past decade, but many of us are still spending as if our incomes haven’t taken a hit.

That behavior has serious implications for the state’s economic future, according to a new Michigan State University study on household financial conditions.

Too many of us are relying on debt, and raiding savings and retirement accounts to try to maintain unsustainable lifestyles, according to the study by MSU economist Lisa Cook.

Data from several household surveys conducted in 2009 and 2010 found that although 67 percent of Michigan residents have budget plans, 81 percent don’t adjust those budgets when their income falls.

One small web-based survey conducted between June 2009 and April 2010 found that 40 percent of Michigan households had at least one person who had either lost a job or taken a pay cut in the past six months.

Median personal income in Michigan fell from 8 percent above the national average in 2001 to 8 percent below it in 2009, indicating a broad deterioration in household balance sheets, according to the study.

But instead of cutting expenses, most residents tapped their retirement savings and credit cards to maintain spending, the study found.

Cook said these behaviors show the need for more consumer education on drafting budgets and sticking to them. Her study also recommends incorporating personal financial education into high school math and economics curricula.

“This conversation has to start a lot earlier,” Cook said. “We need to have this education because debt has gotten out of hand.”

James McTevia, a Detroit-area corporate turnaround specialist and author, agrees. But he says it may be too late for the current generation of adults to change its spendthrift ways.

“The only way to change the culture of debt is by educating a younger segment of our society” not to spend money it doesn’t have, said McTevia, author of “The Culture of Debt, How a Once-Proud Society Mortgaged Its Future.”

Over the past 50 years, the advent of credit cards, home equity loans and loosened credit standards have allowed people to spend far beyond their means, McTevia said.

On top of that, we’ve developed a false sense of optimism that the future always will be better, deluding us into believing we’ll be able to repay the debt.

“That’s been especially true in housing,” McTevia said. “We thought housing prices would always go up, but for the first time in history we’ve had a reversal.”

Cook said other fundamental changes in the economy require that citizens save more and spend prudently.

Many households have absorbed parents, adult children and other family members who are part of the legion of long-term unemployed.

Traditional pensions are exceedingly rare, replaced by 401(k) retirement savings plans that workers must supplement if they expect a decent income when they retire.

College tuition costs are rising rapidly, in part because of declining financial support from state government.

The good news is that companies are starting to hire again after a decade of widespread layoffs in Michigan.

But workers who become re-employed or see their paychecks increase as the economy recovers need to realize there eventually will be another downturn in Michigan’s cyclical economy.

“What we don’t want is consumers being prudent for a short period of time and then returning to their profligate ways of the 1990s and early 2000s,” Cook said.

Contact Rick Haglund at haglund.rick@gmail.com.

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