If Money Could Talk

Money treeAt the Ypulse College Mashup, people talked a lot about characteristics of Generation Y. I found it very interesting. Two things that came up more than a couple of times were that Gen Y’ers have a lot of debt and don’t save money. Apparently in their daily conversations with mom and dad, which we were told is another norm among this generation, money doesn’t come up much. Or maybe the mind-blowing, staggering costs of their college educations make saving just seem plain nihilistic. On the final panel of the day, Gen Yer’s themselves revealed their own insecurity about finances and made it clear they don’t have a lot of good information when it comes to even the simplest concepts around credit cards. While I’m not yet convinced this is unique to Generation Y, it does pose a problem.

Money is one of those things that we’re just supposed to “get,” yet it’s still fairly taboo to talk about finances socially. For example I was taught it’s rude to ask what something costs, or what people make. However anytime I’ve broken these rules with friends, I learn something new and feel reassured that we all have similar concerns. Simultaneously, I am reminded everyone’s situation is different and that’s helpful too. They don’t teach “dollars and sense” in K-12 schools, yet with each year, kids are moving closer to becoming financially independent.

This article (Savingadvice.com) sparked my interest in the topic and got me thinking. Education around money really has to start at a very young age, but I think the teen years are the ripest for the best lessons. Teens are getting their first jobs and are wanting to purchase both big and small ticket items. Money becomes real for the first time for many of us at this developmental stage.

While you can’t go back in time to teach Gen Yer’s about managing their finances, some comprehensive financial books designed to meet them where they’re at right now would be a good start. If I were to write one, it would be titled: Get out of debt. Save. Invest. Give some away.

Am I showing my age or would Suze Ormond consider penning a project?

In the meantime, here’s a cool blog called Generation Y Finance about this very subject.

5 Comments

  1. Amy Strecker

    Suze Ormond’s Young, Fabulous, and Broke is a great place for us Gen Yers to start.  It’s one of the most useful books I purchased in college.

    Also, It makes a lot of sense to me that savings, investing, and tax prep WOULD be taught in school outside of business electives.  These life skills are every bit as necessary as the other high school essentials. No knock on math, but I’d use investing principals a whole lot more often then I have the quadratic equation.

  2. Kristen O

    Alli-

    You’re absolutely right on that the staggering costs of college have had an effect on how Gen Y relates to money.  As a result, how we relate to money doesn’t actually make any sense, and we may even be able to account for the widespread idea that Gen Y has they they can suddenly become famous and someone will hand them boatloads of cash.

    Think about it like this:  The cost of college is so high that it is unaffordable for most families - so high that Harvard and many other Ivy League Schools now don’t charge anything for families making under $120,000.

    The cost of college is so high that even if a student were to get a job as a freshman in high school and work full-time in retail outside of school…. they would still not be able to afford it.

    What’s worse is that the solution for college being so costly is not to bring costs down - it is to focus on large scholarships and making a guaranteed loan to every student that wants to be in school.  By studying hard, getting straight A’s, and holding ledership positions in school clubs, students can now make more money for college than by getting a job.  Free money.

    On top of this, there’s a phenonmenal amount of inflation on everyday items like food and gas.  The housing market is on its way down, but is still out of reach for young adults who may be carrying $50,000 in college debt.  We are being told NOW that Social Security is going down the drain and will never be available to us, so we aren’t planning on a future in which we get to retire, and we don’t have health insurance, so if we get medical bills, we’re going to have to declare bankruptcy anyway, so no point in saving.

    I’m just stating this to point out what’s precipitating the lack of saving by Gen Y: there’s no protection for middle-class saving, no incentive to save because it seems like there’s no way to get ahead, and if you save it will only be used against you (in terms of calculating college assistance for your children or similar assistance programs), or be taken away from you.

    A book would be great - but what would the book really include other than “Don’t spend what you don’t have”?  I don’t know.  It’s possible that there’s some great advice out there that’s just not getting through.

    What I’d really love to see is a book about WHY we aren’t saving, and why that’s a bad thing for America; something to get some national attention and maybe kickstart some policy changes.

  3. Alli

    Ug. It’s all so true…and depressing. I agree totally. The sad reality is that no one wants to talk about how higher education might not be a very good investment anymore. Spiritually, and intellectually yes, but financially no. The ROI just isn’t there. What I see happening in the future is that college will return to what it always was in the past, a luxury for the wealthy class.

    I get it. As a person still paying off debt from two masters degrees, I often wonder about how much more spiritually and intellectually satisfying OWNING MY OWN HOUSE would be all the time! :)

    Good comments. Thank you so much!
    Alli

  4. Chris

    This is a very ironic article for me. I read up on Gen Y marketing (including visiting this site every day) because I am just out of college and working for a marketing company where we sell youth programs to credit unions to teach better financial literacy for people ages up to 24. It’s really hard to teach this stuff but I was brought on to reinvent the programs to reach Gen Y better. I have brought us up to the tech curve and added a lot of features that people my age like to use. We have actually stepped up our youth marketing department by leaps and bounds since I came on because there wasn’t even a youth department until I got here BUT the things we have coming this year are astronomically huge and one project in particular is going to blow the financial institutions away when it comes to this stuff. It’s a big secret so I can’t discuss it right now but when it comes out, if I see more stuff about Gen Y and finances I will write about it.

    Have a great day everyone!

  5. Gareth

    “no incentive to save because it seems like there’s no way to get ahead”

    ^^ Saving throughout your life will eventually make you wealthy through the power of compound interest, even without that lucky strike on the stock market or timing the real estate market.

    Unfortunately that’s boring and requires discipline, which we are all told to throw aside in exchange for shiny consumer goods and an MTV Cribs lifestyle (even if we have to buy it on credit).

    Highly recommend “Richest Man in Babylon”, “The Millionaire Next Door” and (with a huge pinch of salt) “Rich Dad Poor Dad”.

    The quality of financial education in schools has always been poor - but the financial world hands out credit like candy to anyone who asks these days so the glaring problem is becoming more obvious.

    50 years ago a high-school graduate could get married, have kids and still live a happy middle class lifestyle even if the mother stayed home. Credit was doled out by the bank manager who’d known your father and his father before that, and you’d be denied any loans that’d get you into serious trouble.

    These days once you turn 18 it’s difficult not to get a credit card with thousands of dollars of ‘free’ money, up until recently you’d also have been able to get a gigantic mortgage on your McDonalds salary.

    All with the same standard of financial education as 50 years ago.

    No wonder everyone’s screwed.

    Luckily financial education - like any other education - is there for those who seek it, plenty of great books on the subject (see above).

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