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Amber at Yellow’s Green worries that her generation is “set up to fail financially from the get-go”. She believes a variety of factors stack the odds against today’s youth:
- A lack of financial education. “We are not educated about financial matters in our school systems anywhere, unless you choose an optional money management class while in college (when it’s already late in the game).”
- The cost of education. College costs are escalating, so that only the wealthy can afford to attend school without receiving financial assitance.
- Predatory lending practices. Banks and credit card companies recruit young people constantly.
- The cost of health care. Medical care is expensive, and if you cannot afford health insurance when you’re in school (or just out of school), you risk incurring debt.
- Marriage and children. Amber wryly notes that “gettin’ hitched ain’t free” and that “makin’ babies ain’t free”.
- Competing for a home. Home costs were escalating even before the recent U.S. housing bubble. She recommends reading The Two-Income Trap for a “more complete picture” about the impact of housing costs.
- The rules have changed. Society is changing. Values are changing More often, both parents are working. People are living longer. All of these factors effect our approach to personal finances.
Amber makes some valid points. It is tough to get by, especially for young adults. But there is hope. You have the power to choose a financially successful life. You don’t have to succumb to the mindless materialism that afflicts so many of your peers. You can choose to save. You can choose to use credit responsibly. You can choose to instruct yourself about personal finance.
Because of a poor financial education — and sheer stupidty on my part — I struggled after college. I was deep in debt. I spent more than I earned. But I came to my senses, sought help, and taught myself sensible personal finance skills. I read books. I asked advice from people who seemed to “have it together”. I am overcoming the odds to become financially successful.
You can too.
The road to financial independence can be long, many are traveling with you. Stay focused. Don’t lose heart. You will succeed.
[Yellow's Green: Set Up for Financial Failure]
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October 2nd, 2006 at 11:41 am
I agree, many people look at the failures rather than the successes. We as parents should teach our children about using money responsibly. Our children are learning from us every day through our actions.
October 2nd, 2006 at 12:09 pm
I’m someone who woke up rather late in the game at 35 years old. I’m just getting started trying to get into financial health and I have a long way to go, but I don’t agree that somehow the system is set up against us.
The most valid point she makes, I think, is the lack of financial education. The blame for that goes both to schools and parents. There is no doubt that I received no real education regarding finances.
The rest of it though comes down to personal discipline and making choices. You can still work through college on scholarships, work and not trying to finish in 4 years. My wife and I are managing on one income with 3 kids, and yeah it ain’t cheap - but it is possible.
One of the biggest problems is that adults never want to grow up. While I can understand the need to improve the way we educate our kids about money, at some point you wake up and are in debt up to your eyeballs and you just need to take the responsibility to educate yourself.
I’ll stop ranting now (sheepish grin)
October 2nd, 2006 at 12:27 pm
you forgot that in the US, we are hyperconsumers.
car ads, beer ads, toys ads, and now drug ads are running 24/7.
most people just live above their means.
just dial it down and all the above will fix itself.
as for medical, we chose not to have universal health care and chose to tie health care to a job.
October 2nd, 2006 at 1:00 pm
Thanks for the post JD. Believe it or not, I actually AM an optimist, and excited about how well my hubby and I are doing with our money. It does take work, though!
October 2nd, 2006 at 1:51 pm
Part of it is increased costs, yes, but I think most people in financial trouble are in it because they are living beyond their means. Just because you want your kids to go to a better school is not justification enough to buy a house you can’t afford. The debt we take on for things like education and mortgages and car loans, is substantial, but is NOTHING** compared to the debt we take on for things we put on our credit cards, most of which is unnecessary. The only reason our parents didn’t have so much debt was not because they were smarter or had more personal restraint or made more money. It was because they didn’t even have credit cards, and so had to either sacrifice or do without when they wanted something.
Bottom line, if you live within your means, you should be able to get back on track debtwise. And if this site teaches me anything its that you don’t have to live badly to live within your means.
**I’m not comparing principle amounts here, I’m comparing interest rates. 6% and below for mortgages/education/cars does not even come close to comparing to 15% and above for credit, even if the credit total debt is a fraction of the mortgage/education/car loan.
October 2nd, 2006 at 3:15 pm
The cost of education is not going to ruin America. A college graduate should not have difficulty finding a job that pays enough to pay their student loans, provided they’ve gone to a school they can actually afford. The very pricy, very small private schools may not provide careers that go with their tuitions, I’m not sure. On the whole, though, student loans are not crippling. People need to stop pretending student loans are crippling. Parents are putting themselves into debt or saving for their kids’ college but not their own retirement, and that’s just wrong. Guys, we can afford it. If you can’t make your student loan payments, you have problems completely unrelated to the cost of your education.
Weddings do not have to be expensive. Kids do not have to come immediately after the wedding. Housing costs in a lot of the country are *fine*, you can get a perfectly liveable home here for $100k and nice two-bedroom apartments including utilities for $750/month.
The financial education part is huge, though, and I think is part of the reason why the myths continue. Among other things, I feel like the only person I know under the age of 30 who doesn’t feel entitled to a brand new home as my first house, to a $25,000 wedding, to my parents paying for school. I lived at home for undergrad. I’m paying my own way in grad school. My friends who grew up feeling entitled are trying to buy nice homes and struggling with debt problems.
My financial education came at the hands of parents who were broke-but-sensible. Alas, most people don’t seem to have that luxury growing up! Right now, housing at least doesn’t come with late-70s/early-80s interest rates and college is accessible if you’re not upper-class, which it didn’t used to be. Our generation has it pretty good. The problem is internal, not external.
October 2nd, 2006 at 3:43 pm
how many times could the $25k wedding and $$$ diamond been used for debt payment or a downpayment for a house?
of course, you can’t show off a downpayment to your friends and relatives.
October 2nd, 2006 at 4:57 pm
Fantastic article. So very true these days. I was taught by a mulit millionaire that never graduated high school and he said, you can say “I am Smart” or “I is a millionaire” and I’m ok with the 2nd one. I only have a high school education however I’ve still gotten to 100k a year in the “typical corporate rate race.” Thank god I got out of that mess and am working for myself now setting up assets.
I too agree that today’s youth is in trouble if they don’t get wise and self educate. The Gen Yers are victims of the Micro-wave mentallity I call it. They want every thing RIGHT NOW this INSTANT and they don’t want to go through the natural process of getting there. I’ve seen many of them wanting the “millions” with out 1st becoming a millionaire “inside.” Another part of the challenge is that in school we’re taught to be good employees. There’s no life’s philosphy for entreprenuers The last I checked. You make a heck of alot more as a leader than you do a follower.
Teaching our children good solid wealth principles is KEY. I believe it all starts with Sound positive philosophies. Positive philosophies lead to positive attitudes. Positive attitudes lead to positive actions. Positive actions lead to Postive results. Postive results lead to a positive lifestyle. Not sure about you but I know all of the trash I had poored into my mind as a teenager. It’s not suprising what’s happening to our youth today.
All I know is that Bill Gates isn’t teaching his kids how to fill out a resume for a job board. He’s teaching them how to run companies.
October 2nd, 2006 at 4:58 pm
The rising costs are paving the pathway of failure for our children. But there are more causes than those listed above. Look at all of the non citizens who get “ethnic” scholarships. That’s just another way of supporting racism and avoiding confrontation alike. If we removed this type of racial/ethnic based financial system, the educational system would be open to more people who can’t really afford school and a system based on need and not race. Of course this is just one of numerous causes to this financial destruction.
October 2nd, 2006 at 5:15 pm
Scholarships based on ethnicity are, I think, generally intended to promote diversity, not to help a particular ethnic group. So giving one to an international student isn’t counter to the intention of the scholarship program. You’re mixing up affirmative action and diversity scholarship programs, I think, Josh. Affirmative action will usually deal primarily with admissions, not financial aid. (So it’ll get someone in, but they may be laden with just as many loans as the rest of us.)
October 2nd, 2006 at 5:33 pm
well for one thing, it’s up to whoever is giving the scholarship to decide who to give it to. I wouldn’t complain about that.
the last time I was in college everyone can sign up for financial aid.
no matter.
the first quarter out of college wipe off all my loans. before interest even started to accumulate. so education is where every dollar spent can be worth a hundred times more.
October 2nd, 2006 at 6:19 pm
Look at all of the non citizens who get “ethnic” scholarships.
The vast majority of scholarships are not open to non-citizens, even to legal resident aliens. I know–I am one.
I must confess to being annoyed that people seem to think it’s one or the other–self-control OR impossible-to-control expenditures, common sense OR an insane economy.
I happen to agree with most of the people who think my generation has been set up for failure, to some extent. I got my Master’s degree and the best job I could find was part-time. And I see so many of my friends and acquaintances who are in trouble through no fault of their own. But we’ve got the economy we’ve got, and while we can work to change things politically, we also have to focus on the short-term, on ourselves as individuals, and just make the best choices we can. My sister just went through seven months of unemployment, living in Manhattan. But–she lived in Harlem with her three roommates, she accumulated a sizable emergency fund while employed, and she made it through without getting herself into too much debt. And even while I’m angry that she doesn’t have any health insurance (not at her, but on her behalf) I’m incredibly proud of her for that.
October 2nd, 2006 at 11:02 pm
For those who think health care is affordable, obviously you either haven’t had a chronic condition or have continually had a job somewhere with group insurance. Dealing with bipolar disorder, the next three months will be the first time since we got married that we won’t have health insurance. Given the fact we can’t get it, or afford it if we could. And when I say that we can’t afford it, it’s not because we’re irresponsible, but because the monthly payments are comparable to financing two new cars. I’m totally willing and able to cover the costs of the bipolar myself, I just want to be protected in case one of us ends up in a car wreck. But as far as the insurance industry is concerned, we have been written off at twenty-five.
October 3rd, 2006 at 12:12 am
I think one thing we don’t really do is think about our college educations as tools for the rest of our lives. I’m a dropout, so take this with a grain of salt, but I see people all the time who spend a LOT of money on degrees which have essentially zero fiscal value.
That’s not to say you shouldn’t learn about the things you care about; but spending $50,000 to acquire an advanced degree which won’t net you a job isn’t sound fiscally.
I’m definitely not anti-college, but also think that colleges in general paint rosy pictures of the opportunities that await the graduates of certain disciplines.
Health care is tough. We’re self-insured because we both are self-employed. I think our premiums are around $3500 a year, combined. We don’t do dental because the cost of dental insurance is about the say as the cost of visiting the dentist and paying cash.
October 3rd, 2006 at 6:05 am
It basically boils down to credit card companies and TV ads. Everybody wants everything right now. They don’t want to save for it. Hopefully you make those mistakes early and get burned. That way you’ll recover and learn from them.
- Bryan