Deplorable statistic

I was reading the Wall Street Journal today when I came across this alarming statistic from the Tuesday edition.

The median net worth of Americans aged 25-34 was $3,746 last year.

Seeing as how I’m flat in the middle of that age group I have a few things to say about that.

What the hell are all you people doing with yourselves? $3700? That’s all? The median wage in America is around $35,000, I believe, so even if you do nothing but save 5% of your pay in your 401K you are almost halfway to that figure, in one year.

Are these people, my peers I guess, not serious about retiring someday in the future? That’s what I think when I look at this figure. It seems to me that their digital cable, fancy cell phones, designer clothes and nice car are all more important to them than the fact that they’ll be eating cat food when they retire. What do they think will happen when they get old and don’t have any money saved? Someone will just swoop in with a check for them? We might get some social security money but I’m sure as hell not counting on it for my well being in the future.

Now I know, people in this age group are still finding themselves. Blah, blah, blah I know things are different. Blah, blah, blah People aren’t getting married until later in life (being married I think is one key to accumulating wealth, as long as you stay married) so they are spending more money in their life. Blah, blah, blah. You can spend money and save money too. Practice a little delayed gratification. You don’t have to have that huge TV, or the fancy furniture. If you want to live like your parents did you have to live like your parents did when they were your age first.

I have a friend who graduated college (same degree, same company and salary level, and graduated at the same time from the same school as me. Now he makes more though. Damn him!) he was smart about money, even considering he came from a background of not having much money. (Perhaps that helped??) He slept on a mattress on the floor of his apartment in a cheap apartment in a cheap area of town while he got on his feet after college. (Not that this area was really unsafe. I just never really cared for the wino who acted as the doorman when I went there. Should I tip him, not tip him? I never really knew.)

Little by little he would buy nicer things as he had more money. He moved to a nicer place closer to work when he was settled at work and knew he would be sticking around. Whenever he got a raise or bonus money he would play with a little, save a little and pay off things with a little. Eventually he used some money from stock options to payoff his student loans and buy a car. (I made fun of him incessantly (while the stock rose) for doing that while I held onto my remaining stock after cashing in the options. Now, his car is worth more than the stock is and he has no student loan. C’est la vie.) By working hard and living within his means he was able to buy a nice little house for himself and his girlfriend. All the while socking away money for retirement and still having fun with it.

This is what I’m talking about with living below his means and being smart with your money. Sure maybe he had to wait a little while before he got some things he wanted. I mean, he drove a pretty busted down car for a while before he was able to get his new car. (The front wheel even fell off of it one time. Seriously, it done fell off while he was cruising down the highway. No joke.) But it’s a great example of how to manage saving, spending and living as a young adult.

I’m convinced that the most important lesson that most people aren’t taught anymore is how to be smart with their money. As a person you can live through and come back from an occasional stupid decision about your money, but if you make the same stupid decision over and over and start to think that decision is OK you set yourself up for a lot of bad decisions and most will be worst than the first.

As a parent I know that I’m going to drill this information into the heads of my kids so that they can make smart decisions. Helping them make these decisions when they are younger and still in my care hopefully will set them up for a good lifetime as a young adult. I hope if they come across a statistic like this when they get older they will look at it and wonder what the hell their peers are doing. Then I’ll know I’ve done my job well.

FGLB

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6 responses to “Deplorable statistic

  1. you need to add this. Always follow your parents advice concerning finances for at least the first 3 years after college. hahaha

  2. Matt, one thing that’s good about living in Iowa is the low cost of living enables people to save more. My parents drilled into me how to save and spend wisely and I thank them for it now. Another thing I hated then, but appreciate now, is that my dad would find part time work for me in the summer growing up-from age 14 on up. He would make sure I w0uld save half of what I made to use throughout the rest of the year. Instilling a good work ethic coupled with money saving skills will definatelty help out your kids in the long run.

  3. You could listen to your older brother more too Ben.

    Dan–

    You’re right. A person’s choice of where to live makes a huge difference in how they can set themselves up for the future. I can not for the life of me figure out how the people in CA will ever get ahead with what it costs to live out there.

  4. Matt, they won’t get ahead with all the debt they are shackled to. I almost moved to Denver last year, but I didn’t get the job offer. After looking at Denver’s house prices, I was glad I didn’t get the job. I know Iowa isn’t one of the most exciting places to live, but you can live comfortably and still have money in the bank and there’s something to be said for that.

  5. Now I just have to decide how long to stay here and rack up savings. Or should I jump at the teaching/coaching opportunity we discussed should it become available? Any suggestions older brother?

  6. I just found this post linked from Changing Things (July 23, 2008). I have to speak in defense of the low rate saved by folks our age (I am only a year or so older than you, it would seem). Some families have chosen to live on one income so one parent can stay home with the children. We are trying to raise 5 children on one income and let me tell you, in the Northeast, that leaves no money for anything else. In fact, it doesn’t even cover the basics when the average rent for a 3-bedroom apartment is over $1000 per month, which is over half of my husband’s take home pay. Not everyone who has no money saved is fiscally irresponsible. Okay, perhaps having 5 kids in the first place was, but until #4 was born, we had two incomes and didn’t see how hard it would be. Definitely teach your children how to save. I was never taught and it is very hard to learn when you are out on your own.

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