Buy a House
Owning your own home has long been considered the American Dream.
Earlier generations saved up enough money to put a down payment on a house and stayed put… forever.
The landscape for today is much different with the internet, ease of travel, and seemingly endless opportunities if you are willing to relocate.
Does that mean that a house is a bad investment or that you shouldn’t buy one? It depends.
Some argue that it is a liability because you have to pay the mortgage, taxes, insurance and maintenance costs plus time spent fixing stuff. Some still say that a house is your best investment because you are wasting money if you rent.
I think there is a middle ground to where it can be an asset or become a liability. If you buy a house for the maximum amount you qualify for, chances are you could rent for a lot less and invest the difference. On the other hand if you buy modestly with the intent of renting it out when you leave, then it could very well become a great asset.
Save Money
The interest rate for a savings account or savings CD when I was born was around 10%!
If only we could open a checking and savings account at a bank and they were offering 10%.
Using the rule of 72 you can double your money in 7.2 years with that rate.
The past decade they have offered closer to 0.25% and now you can get some savings accounts and CD’s that offer 2-3%.
The old advice to save your money is not what it used to mean. It is still a good idea to save money versus wasting it, but keeping it in savings will lose its purchasing power each year to inflation. At best it would retain its value.
We need to seek education on investments and a place where our money will grow relatively safe.
This is especially true for pension funds which were once calculated on that safe rate of return – no longer the case.
Get a Pension
Staying loyal to a company used to mean you were going to be taken care of.
Today companies are pawning off that responsibility to the employee with 401(k)’s and IRA’s. It is not uncommon to see them axed after many loyal years with nothing to show for it.
It is also increasingly prevalent to see resumes where the average time spent with an employer is 2-3 years.
Pensions have all but gone away and the pensions still out there are in increasing danger due to the low interest rate environment. The safe return is gone, which leaves pension fund managers to take on more risk in order to meet demands. Some government agencies look to Wall Street where they get hit with hefty fees.
With people living longer, the toll will be heavier on the pension systems too. Age minimums will have to be raised and taxpayers will get stuck covering some of the bills.
I hope the pension systems turn a corner but I wouldn’t be betting money on them. It is better to educate yourself on how to provide for your own future.
Get Married and Have Kids Young
Getting married and having kids right after high school or college has been the traditional model for generations. Life expectancy used to be much lower, kids were needed to provide manual labor, and it was a good chance not all of them would live to adulthood.
Despite the media hysteria today, we are safer than we have ever been, it’s rare to hear a child didn’t make it, and we have a long life expectancy.
People will change a lot over the course of their life and they will definitely be a completely different person at 30 than they were at 21.
We also have more challenges to deal with in terms of financial stability. It is said that the average cost to raise a child to adulthood is $250,000 and I wouldn’t be surprised if it was higher.
With stagnant wage growth, increased living costs, and rising debt, younger people are struggling to raise families or putting it off entirely.
Go to College and Get a Job
People are still going to college and getting jobs, but a lot of those people are getting those jobs to the tune of 6 figures in student loans!
That debt is not easy to pay back and cannot be dissolved in bankruptcy.
College has also become a business and a bachelor’s degree has been watered down. Freshman year they tell you to take a few classes to see what you like but really you are just going deeper into debt.
Colleges also produce graduates with degrees who can’t get a job or have to work a service job making a subsistence living and struggling to pay back those debts.
This has affected society in a big way pushing back the timelines for marriage, kids, and home ownership.
With the gig economy, the internet, sales jobs, and other money making avenues, going to college may not be worth it. Since college has become a business and money making enterprise it has pumped students through programs and taught us less about succeeding post graduation.
However, college can still work for some people.
Google allows us to see what the average salary of a chosen field is after graduation. If you are wanting to spend $100,000 on a degree that makes you $25,000 after graduation, be prepared to struggle early on.
If on the other hand you go to a cheaper school, apply for scholarships, minimize the time you are there and come out with a high paying degree, then you will be off to a much better start.
