To set the mood:
The 1960s were the decade in which my parents grew up. Their parents were the so-called Greatest Generation and I, for one, actually think that moniker is appropriate, considering that their childhood was the Great Depression and their early adulthood was fighting World War II, a set of experiences almost beyond my grasp. My parents (and with some good probability, yours) grew up in the era of the rise of the military-industrial complex, in which people could reasonably expect to get a solid paying job and stay there throughout their lives.
This meant several things:
One, American education was the envy of the world. You simply couldn’t get a better education than the one provided by an American institution. Colleges were yet to be overcrowded as even then only a small minority went to college, so if you were to get post-secondary education in the United States, you were set.
Two, real worker compensation was never higher. In terms of the actual value of a dollar at the time, the average American worker had it made in the 1960s and 1970s. No matter what you did in life, you could fall back on a factory job that would pay you a strong enough wage that you could make it, no matter what.
Three, although the Soviet menace was real, it was distant. Although the Cold War was terrifying in its own way, it never ascended into a fighting war and there was never any sort of direct attack on American soil. The Vietnam War was ongoing, but it was literally on the other side of the globe, abstracting in a way the bitter horrors of war and death.
Four, the art of marketing and consumerism was in a nascent stage. Look at the sophistication of advertising in the 1960s and compare it to now. There were some baby steps, clearly, but the psychological edge of today’s marketing utterly blows away what you would find in those days.
Five, the price of homes in real dollars was extremely low compared to today. The price of a home since 1960 has gone up at a rate much faster than inflation, a bull run that is perhaps finally being slowed or reversed after many years of incredible growth. Thus, someone who bought a home in 1960 stumbled into a killer investment.
Six, employers took long-term care of their employees. If a person worked in a factory for thirty years, the company would guarantee them a pension that would safely enable them to live out the end of their days in a comfortable fashion. If you took care of the company, it took care of you.
Under these assumptions, my parents could buy a home (rather cheap) when they were younger than I am right now merely on the wages earned with just one of them working a seasonal factory job (which paid quite well). Because of this factory job, they now receive a very nice pension after having never put anything into their own retirement plan.
Does this sound like your economic reality? It certainly sounds nothing like mine. My reality is more like this:
It involves employment that treats me more as an independent contractor instead of a real team member, which means I have to save for my own retirement rather than plan on a pension.
It involves homes that are amazingly expensive, even in the relatively cheap area where I live.
It involves no “fall back” plan in the form of abundant factory work that anyone can do. The fall-back jobs that I know of make minimum wage, which is far less than a true living wage in the United States.
My parents regularly offer “advice” on how I should manage my finances based on these assumptions that their childhoods and early adult lives showed them, pointers such as you should buy a house as soon as you’re married and you’re young – you should be buying fun stuff – go ahead and get that monster plasma television. Their hearts are undoubtedly in the right place, and they are speaking things they believe to be true, but they aren’t true for me – if I took their advice, I would be in the poor house.
So what’s my solution? If you are given advice by your parents – or by anyone at all (including me) – consider the assumptions they’re coming from. Are they valid for you? Even if they are, ask yourself does this advice really make sense for me? Don’t just blindly follow any advice.