Updated on 09.18.14

Taking Advantage of Your Generation

Trent Hamm

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.

4 That 20-Somethings Now Should Be Doing

1. 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.

2. 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?

3. 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.

4. 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.

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  1. Amanda says:

    Seriously, though, for those in their early 20s just starting out, this is great advice. Heck, it’s great advice no matter who/where you are in life.

  2. William says:

    Yea! Thanks for the affirmation. Written from a desk at megacorp.

  3. Brett McKay says:

    “Take advantage of the leveling playing field.”

    I just read “The World is Flat” by Thomas Friedman. While it’s true that jobs are getting outsourced overseas, thousands potential money making opportunities are being created on the web.

    I get giddy thinking about all the different sources of income I’ve created using the net. I have my blog, I sell stuff on e-bay and amazon, and I my wife and I are trying to sell a product we invented. We’re not making tons of money, but it’s more than we would have made without the internet.

  4. boomie says:

    As a Baby Boomer, my parents grew up and lived through the depression. My parents would never, ever borrow money, use a credit card or take out a loan. True, they could buy a home for only $10,000 but they still had the $10k to begin with. I was forbidden to ever use credit. Naturally, of course, being a child of the 60’s I rebelled, used credit and was buried alive by it. My parents didn’t rescue me and I learned valuable lessons, one of which, what my parents told me was true: ‘Debt is slavery to the master’. As long as you have debt, you will never be free. You will never have wealth. Never mind what the Joneses have. Live within your means. Buy what you only need and save, save, save, save.

  5. My dad retired when he was 42. There’s no possible way to match what he did. I give up! I’m living my own life… how I want it, on my terms. And I’m not going to try to match how success he was and how wealthy he is! Stuff it dad!

  6. sfgal says:

    Good reminders! Your blog motivates and inspires me to stop wasting time – I rebalanced my 401K portfolio today increasing the percentage in international/small cap funds.

    Thanks again!

  7. Caren says:

    Our kids are in your generation and in spite of a BA for one and PhD for the other they don’t make as much combined as my husband alone made so they fit into this trend.

    You know what though? They are just as happy as we were and in many ways happier because they’re doing what they love to do and spending more time on things they think are important like being there for spouse and kids in ways we never had time for. I guess what I’m saying is that once basic needs are met, happiness is not dependent on having as much as your parents had, and in fact having whatever you want like we did can detract from real happiness.

    Thanks for a great website.

  8. afd87ag87 says:

    Just because we might not have as much material and financial wealth doesn’t mean we have to be poor.

  9. Benji Gonzalez says:

    For starters, I think this whole idea that your parents had everything in the palm of their hands before 30 borders the mythological. Especially to anyone born in the late 70’s and 80’s. You have to consider that parents of this age were the first in this country to grow up with instant prosperity and later demanded instant gratification. How else could a culture so involved in drug abuse and sex be so celebrated.

    One of my old bosses once told me that no one lets you make any money in this country until you are 40 – I got his joke.

  10. Ben M says:

    I think that you and your friends are looking at things from the wrong perspective. We all knew our parents from their mid to late 30s and on. We never saw them in their 20s struggling financially when money was tight. Instead we saw them after they purchased their first home, their second car, and some of the other necessities.

    I’ve been blessed financially, but the worst thing that ever happened to me was I was laid off during the dot com implosion of the late 90s. I never had a period where my wife and I seriously struggled.

    I see though that others my age see what their parents have now and forget that their parents have been working for thirty plus years to accumulate those possessions.

    I consider myself far ahead of my parents financially when controlled for our ages.

  11. m says:

    I think for me the frustration and hopeless has been not from wanting or trying to emulate my parents and their generation but more from the shock of realizing that things are not the same today as I had expected my whole life.

    It’s not so much that my finances are not similar to what my parents’ were at my age, I don’t really care about that, nor did I necessarily expect that. But it’s more that my finances are not what I was led to believe they would be at this age, and I think there is a distinction (making less than you thought you would vs. making less than your parents did) there.

    I’m not trying to live like my parents did at my age, when they had much more security and money than I do now and owned a home and could afford trips to Europe and the like (Hell, I can’t even afford a 1-2 day road trip right now). I am simply trying to adjust to having so much less than I thought I would at this point and much less than my years of education and work would suggest. Knowing that my financial future is likely much more bleak than I’d previoiusly expected isn’t always easy to accept.

    Growing up believing that a good college education and a professional career and hard work was all that was required for a fairly comfortable, middle class or lower middle class existance, it was a major shock for me to learn that none of those things got me anything more than a small, rented aparatment, beat up old car, and a struggle covering the expenses each month.

    I’m not trying to live like my parents by any means. I’m just trying to adjust my mindset and my lifestyle to the reality, now that I realize it doesn’t even remotely match my previous expectation, an expectation that was decades in the making, and thus a bit difficult to shake off quite so easily.

    With so many young people experiencing the same, this issue is very relevant and important. This is why so many adults are living back at home with their parents for sometimes up to several years or living with roommates well into their forties and fifites and so on.

    I don’t think this is happening because people are living extravagantly or beyond their means. I think it is more a result of the current economy and esepcially in the early years of a career and with school loans to pay off, many younger people find the only way to live wihtin their means or to save anything at all is to come up with creative living solutions, such as moving back home or taking on many roomates. I even had a friend who traded his car for a van so he could move into it because despite a fulltime job and living very frugally he coouldnt stay living within his means while paying rent at his apartment.

    The conditions today are such that many young people can’t support themselves on their jobs, even when living frugally. Many are disenheartened because they are living a lifestyle that is much lower than what they ever expected to have with thier level of education and work.

    I agree with you that it’s important to accept that things are how they are and to not fight it. We do have to learn to live with the current conditions and make the best of them. But I do think that many young people are doing their best and trying to live within their means and that many are not trying to emulate their parents, but only trying to get by. Just because they aren’t doing well financially doesn’t mean it’s because they are buying plasma TVS and designer jeans, either. Anyway, thanks for the good tips and strategies.

  12. Mitch says:

    And with people postponing childbearing, some parents *are* older and more established before us “young’uns” come around. I can see a world of difference between the perspective of my childhood (when my parents were paying rent AND a mortgage AND credit cards after a period of unemployment) and that of my youngest sib, fifteen years younger (when my parents own a home again, Dad’s engineering salary has coasted gently up over the years, and us older kids are all more or less out of the house).

    In some ways it’s more responsible to wait until you’re established. Indeed, I am made to understand this is why in 17th century England the upper crust married at 15 and the regular working guys waited until they were in their mid 20’s. However, it does seem with the way we are so age- and class-stratified and suburbanized that there is no sense of the process.

  13. Minimum Wage says:

    What good are 401(k) and Roth IRA if you make minimum wage?

  14. plonkee says:

    I’m about the same age as Trent, and I can remember both my parents when they were my age, and relatively speaking they had more money than I do. Property was cheaper then – they were younger than me when they first purchased a house and it would now be worth approximately twice what I can afford.

    They had/have good retirement plans and what appeared to be a secure (single) income. Of course they were as poor as church mice because they had children, but not as poor as I would be if I were supporting 3/4/5 people on my income.

    I agree though, that I may have less money, but I have more opportunities to be happy thanks in part to the beauty of the internet/web and the rise in cheaper travel. Having no kids helps.

  15. mella says:

    Ben & Benji – ditto to much of yours.

    The previous generation isn’t totally blind to the fact that things are different – I’ve had lots of conversations with my 40-50 something friends (I’m 28) in which they reflect how much harder it is now to live a standard middle class lifestyle than when they were growing up. I guess my thought is that lifestyles have changed just as much as the rest of the world – and I’m not talking exclusively about frivolous indulgences, instant gratification, and irresponsibility, though heaven knows the Boomers should know about that too (joke). Think of now compared to the 60s – we have smaller families and live in bigger houses; second cars are the norm (and generally necessary to support a second income) and we all have tons of things – very normal things, microwave ovens and color televisions, let alone the cell phones and computers – that didn’t exist when my folks were small children. The (developed) world has changed so drastically in the last several generations that any fair comparison takes subtle consideration. So, good call, Trent.

  16. mella says:

    I also meant to say – it’s far less depressing to just think of Social Security as a tax you pay to live in a society in which old people don’t starve to death wholesale. Morbid, but I think for us, realistic. And perhaps a little closer to the original concept.

  17. Ted Valentine says:

    The reason for the dissatisfaction is most people coming up are spoiled. They’ve been told they are “special little snowflakes”. They have been given everything they ever wanted. Nobody ever told them no. Their parents raised them as the center of the universe and never let anybody hurt their little feelings. They think they’re supposed to go to college without paying and live the same lifestyle all along and immediately upgrade when they’re out.

  18. silver says:

    “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.”

    I disagree with this. I have always worked hard at my job, because it’s the right thing to do. It has the side effect of benefiting the company, too. Then, when I wanted something (I wanted to work at home so that I don’t have to put my baby in daycare), they were willing to work something out, because they didn’t want to lose me as an employee. I don’t work for a megacorporation, but I don’t work for a small company, either.

  19. Minimum Wage says:

    I’ve been out of college for 25 years and all I’ve done over the years is downgrade. When do I get to upgrade?

  20. ck_dex says:

    From your first point: “…working hard to benefit the company doesn’t benefit you at all.”

    Wow. From my humble start ringing up groceries at 14 to now, working to improve and grow the company I work for has always resulted in monetary benefits (not to mention societal benefits which are my real motivators at this stage in life). If you own company stock or options (as even most low-paid Starbucks employees do) suggesting improvements, new products, new revenue streams can make a huge difference in your 401K, personal investments and compensation.

    I don’t disagree that you should take advantage of all the perks to improve your knowledge, and your other advice on avoiding credit etc is excellent. But not everyone needs to go start his or her own business to be truly fulfilled and successful. There are a lot of pretty frivolous small businesses out there that contribute a lot less to the good of society than some big corporations. And those established companies can be very rewarding and fulfilling if you are willing to be an engaged employee.

  21. Eric says:

    I liked your article because you took a generally negative perspective and gave hope. I have a “good job” but only really get excited about my future when I look at new things I could pursue. I believe America has the greatest opportunities available to allow anyone to break the income trend.

  22. Steven says:

    Interesting post.

    I don’t think the twentysomethings today are any different than the twentysomethings were when I was twentysomething back in the early sixites in San Francisco. I thought I was immortal.

    However, when I did get serious about my life financially, I can say today’s twentysomethings are at a advantage to some degree – they have choices. My father was from the depression generation and everything was cash. He did very well in construction and land developement, but it was always a mystery to me how he achieved what he did without investing in the market or ever borrowing money. Also, we never, ever had finacial discussions at home.

    It wasn’t until my early thirties that I discovered personal financial management shouldn’t be a mystery. The IRA came along and with the IRA came an explosion of mutual funds, personal finance magagzines and books, and brokerage houses opened their doors to the “small investor.” Hard to believe that prior to the IRA, there were very few mutual funds avaiable and the ones that were available had five to ten thousand dollar minimum deposits, very little information in the way of books or magazines, and nothing taught in the school system.

    I played catch up in my thirties and by the time I reached 46, I had more money invested in the stock market and mutual funds than I had earned working for a living. I retired at 57.

    The twentysomethings today are faced with something I never had to contend with: the paradox of choice. Thanks to the internet and 401ks and IRAs, everyday financial decisions have become increasingly complex. And they’re marketed in such a way, they tend to set unrealistically high expectations on the one hand, and you’ll “never have enough to retire” on the other. Your financial life doesn’t have to be that way. Invest in index funds, reinvest your dividends, and ejoy your life. Keep it simple.

    Today, I am retired and comfortable – not rich – and I donate all my time to helping young people and “the working poor” with their financial lives. I’m a firm believer in “Each One, Teach One”.

  23. formul8 says:

    I turned 32 last month. I bought my first home at 24, got married at 25 and divorced at 28. I sold the house, mode some money, blew it all and moved back home at 29. I take care of my 91 yr old grandma in exchange for zero rent. I put 10% of my income into 401K and save as much as I can in an ING account. I have a car payment and a cell phone bill and zero debt. I have about $20K in the bank and make $50-60K a year. Still, buying a home in Chicago and doing my desk job at minorcorp are daunting.

    I abhor my job and have been going to school to change careers from sales to something else. It has not been easy, but the best thing ever was getting out of the rat race of doing jobs I hate because I had to pay the mortgage. Now, I can walk away and still be good for a while. The prospect is tough for people our age. Especially, the difference bewteen values and work ethic from Baby boomer to the Gen X and Y’s. I learned the hard way that credit is a tool like a hammer than can either build you a home, become a useful weapon or can kill your self with it.

    It really is not too late. It’s takes the vision and guts to make the changes and try NOT to follow the Joneses.

  24. Amy Haden says:

    Tomorrow I celebrate 20 years at the company where I work. I’m a reasonably hard worker but not overly dedicated (no cell phone, no blackberry, minimal overtime), yet I’ve been able to improve my own skill-set (and have excellent benefits) & I’ve done my work and helped the company improve its processes and profits along the way. The company and I have both benefitted thus far.

    As for comparisons — very interesting & informative, but also very dangerous (that’s what gets us into so much trouble with those darned Joneses). I recently had a 20-something friend comment on my new little Toyota: “Wish I had a new car…” Wish he could’ve seen me in my $250 1974 Dodge Dart when I was his age…

  25. I agree with mella … we live a much more affluent life than our parents overall. Sure, by the time I was 10 my family had all the things (two cars, a nice house, all the other little things), but they didn’t start that way.

    Housing is perhaps the one thing that _is_ more expensive. But imagine if you didn’t have a cable TV bill, your phone bill was only $15 a month (vs. $90 for the two-line cell phone and $45 for the telephone with all the features and unlimited long distance), you only had one car that was 10 years old and cheap to insure, your kids only had one activity a week that they would bike to on their own, no one had iPods, stereos, TVs in their rooms or computers, meals were made in the home most nights, lunches were brought in paper bags, etc, etc. There is a lot of money tied up in those things that could be used to help significantly with the offset in housing costs (this coming from someone in the LA housing market, which is among the top 10 most ridiculous markets.)

  26. UncleOxidant says:

    I think the biggest stumbling block we’ve thrown in the path of the 20-somethings (and younger) is all the housing speculation fueled by loose lending standards which has allowed housing prices to get way out of line with incomes. Either prices have to go way down or incomes need to go way up (I don’t think the latter is going to happen anytime soon) or a combination of both – if not, the next generation will be saddled with even more debt.

  27. db says:

    Well I think I’ve cooled down enough to reply to this.

    I have far transcended my parents and grandparents. My dad was a career army soldier and my mom was a housewife. Later my dad retired and my mom worked retail. Through all of their marriage up until retirement, their combined income never exceeded $35K. We never went hungry and always had a roof and clothes, but my mom went without new clothes so I could have new clothes for school and cooked lots of beans and cheap cuts of meat. It’s only in full retirement that they finally seem comfortably off — mostly thanks to living in a paid-off home (that they bought in the early 70s) and having managed to save little tiny bits over the years. And they always, always avoided debt.

    On the surface, I’ve always had it much easier — which isn’t to say I’ve had it easy. But I do make a lot more than they ever did and I have more in savings at my age than they did. I also really missed the boat with avoiding debt.

    I think the biggest difference is the overall sense of entitlement young people (myself included) have in contrast to older generations. When I was driving my first car, a beat-up Subaru, I couldn’t wait for a new car. My parents have NEVER expected to be able to drive a new car.


  28. js says:

    Taxes and housing cost way more, I think that’s one of the main changes. Of course taxes and housing are item #1 and #2 in terms of cost, in most people’s budgets. State taxes here in California have gotten especially ridiculous.

    I don’t regard the social security system as benifiting me personally, I just hope it keeps my parents well provided for. They are big spenders now that they are old and I don’t make enough to bail them out. So long live social security!

  29. icup says:

    I guess I’m the only one here who’s doing better than my parents..

    My parents are high school graduates, worked in manufacturing until the jobs were shipped off to mexico and vietnam, don’t own their houses (they’re divorced), drive used cars as a rule, and probably will never retire.

    I’m 31, am a college graduate, work in an IT job that will never be outsourced and is very secure, own a mortgage, own my car I bought new, and have a substantial amount in my 401K

    I really do hope social security takes care of at least one of them, because I don’t think I can take care of both.

  30. Minimum Wage says:

    icup owns a mortgage? are they available individually on the secondary market now?

  31. icup says:

    oops, my bad. I was waffling between “own a house” and “have a mortgage”.

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