I subscribe to an email list of high school and college acquaintances. It’s mostly a discussion list of about fifty people my own age, and I know almost everyone on the list – it’s a great way to keep in touch with a circle of friends. It gets about thirty messages a day – we discuss things, send out ideas and interesting links, and so forth. It’s bluntly honest and because of that it’s a refreshing read at the end of each day.
For the last week, there has been a really interesting and frank discussion among all of us about the financial realities of twentysomethings today. We’re all in our late twenties, but we’re in very, very different places financially, ranging from a Wal-Mart worker to a M.D. deep into his residency to, well, me with a steady job and a family and a nice home.
Yet, with little exception, what I hear across the board is a sense of frustration and hopelessness, a sense that no matter what choices you make, you’re not going to find yourself in as good a situation as your parents. This sense falls right in line with this piece from the Financial Times:
Earnings of the average US worker with an undergraduate degree have not kept up with gains in productivity in recent decades, according to research by academics at MIT that challenges traditional explanations of why income inequality is rising.
I’ve discussed this situation before on here many times, but what I keep discovering is that this sense of hopelessness has roots in the fact that some of us are trying to emulate our parents and the choices of their generation when the truth is that the reality right now is quite a bit different than it was for them.
Here are four fundamental things that twentysomethings should be doing that their parents would likely have never dreamed of.
Realize that you are the valuable part of the equation In the past, workers would try to do things that would benefit the company, and they would be rewarded for it. Now, as you can see with the quote above, working hard to benefit the company doesn’t benefit you at all. That doesn’t mean that you should slack off at work, but it does mean that you should be focusing on improving yourself and letting that improvement benefit the company. Take as many classes as you can on the company dime. Get certifications. Build genuine relationships with as many people as you can. These things benefit you and benefit the company, so focus on these things as much as you can in the workplace.
Take advantage of the leveling playing field The internet makes it possible for me to sit here in the middle of a cornfield here in Iowa, write about personal finance and personal development, and reach tens of thousands of people all over the world (11,000 subscribers and at least that many web visitors each day, so I’m not just making up that number). You can start a business doing whatever you like in your basement and, thanks to the internet, find customers anywhere. Sell your homemade soap. Write a book. Design tee shirts. Become a political activist. Start woodworking. I have a friend who makes short videos for weddings in her spare time using video editing software; she just picks up a packet of photos from them and gives them back a DVD. You no longer need hundreds of thousands in capital to make a go of it, so why aren’t you trying to get into business for yourself?
Respect that the government probably won’t help you in retirement Sure, this is a downer, but look at the benefits around you. Why do you think 401(k)s and Roth IRAs have come into existence? They effectively do what Social Security was intended to – give you secure money in retirement. You should be collecting every matching dollar that your employee offers in your 401(k) and then also maxing out your Roth IRA. It has never been easier to build your own path to retirement, so you don’t have to sit around and worry about what plan the government will come up with to “bail out” Social Security. It’s your own destiny – control it.
Choose not to be a credit slave Every month, if you spend more than you bring in, you’re choosing to be a slave to someone else. I watched my parents do this and there was a period in their lives where things became extremely tenuous – they were afraid to answer the telephone, knowing that they had given away everything to the credit card masters. It may not feel like slavery to you, but it’s slavery nonetheless. Bills will keep coming in and building up until eventually it will eat you alive. Even worse, it’s a chosen slavery – you have the power to simply choose to spend less than you make each month. We have our parents as a bad example – if you’ve ever seen your parents or another relative swimming in debt, you know exactly how bad it can be.
What do those things have in common? You. For our parents, the table was set to be the “rely on government and our employers” generation, but guess what? That opportunity is gone – it’s a memory of the past. Today, being successful means that you stand on your own two feet – it doesn’t mean having a $300 pair of pants and a plasma television. When twentysomethings play that game, they’re either working a job that provides incredible wealth, they’re living off of mommy and daddy’s money, or they’re so far in debt that they will struggle against it all their lives or eventually be sucked under.
Every day, find your own strength. Don’t waste your time wanting consumer goods or happily working at your desk job at MegaCorp. Instead, learn something new. Take a class. Learn a new skill. Start your own business. Spend less than you earn. Start building for retirement.
This time around, it’s up to you.