Millenials' Finances - (Grumpy Old Man Takes)

[Mr. Tightwad]

I can't imagine living in a city like LA, being poor and trying to go to college.

My kid got her bachelors in '21 (at the age of 18!) and I got to pay 40K along the way.

She knew a few dozen students that didn't pay a dime, zero, zilch, for their schooling. Free...everything. And it wasn't scholarships.

I'm sure one can use Gemini to discover how this occurred.

So "some" poor do get in.

 

[Luvtoride]

I think this is certainly relevant around here.




The only attitude that matters for retirement outcome is to spend less than your income and to save the difference in a way that beats inflation. The rest is just bashing people that think differently than you.

Well said and thanks for the “younger” generation perspective! Yes, it is much different than the Boomer generation but we all have to decide our priorities and how we will raise our families. It sounds like you have a good plan despite the lack of guidance growing up. Well done!

 

[marko]

Late to the party but here's my take:

I believe that every generation has a certain percentage of people who are going to succeed regardless of the obstacles. They just "find a way". We all know a few of them personally and many are right here on this thread.

We also all know of a certain percentage who, despite two degrees and family money are working at Walmart (at best).

I don't know the common denominator of the sucessful group. A refusal to be a victim? Refusal to take "no" for an answer? An ability to spot opportunities? A willingness to sacrifice the short term for the long? Is the reverse so for the other group?

I've run into a few of these 20 year-olds who, you just KNOW are going to make it, "one way or another". They just have that "thing" about them.

Did our boomer generation have it easier? I have have a long, sad, personal list of those born to exceptional privilege and expectations who became utter, bitter, full-blown failures.

The obstacles may have changed over the years but the challenges to success remain. Its built into the operating system.

Nothing is/was easy now or back then. Nothing is/was guaranteed now or then. Every generation has winners and losers. A lot of life is about threading that needle.

Just one man's view. YMMV.

 

[Luvtoride]

I get the impression from what I read more parents today are/will be faced with that predicament than ever before. Tough choice to be sure.

No emergency fund, doesn't bode well for ever retiring...wonder how she/they expects that to play out?

How can we TELL our Millennial children what they should do?! I can’t even broach the subject with my daughters or their husbands. My younger daughter is going thru a job change right now and all I can do is ask her about benefits, 401k match etc. I don’t think they are thinking beyond living for today and raising their kids. We help out quite a bit by paying for certain extras for the kids like summer camp.
Any suggestions for having a real discussion with them?

 

[Cassius King]

Honest question, and maybe it needs a separate thread in and of itself.

Home prices have been discussed as the largest hurdle/issue for the younger generation. Home pricing like most things is based on supply and demand. Who keeps buying at these elevated prices? Stats suggest population growth has been stagnant due to a decrease in immigration and a decline in birth rates.

Is it a perception that this is the new normal? A case of FOMO? Expectations too high?

This drives a lot of the conversation being had in this thread. Younger folks staying with parents longer, suboptimal future outlook, etc. Locally all I see are new subdivisions, apartment complexes and condo's being built everywhere. Where's the demand coming from if the population stats are what they are?

 

[marko]

Honest question, and maybe it needs a separate thread in and of itself.

Home prices have been discussed as the largest hurdle/issue for the younger generation. Home pricing like most things is based on supply and demand. Who keeps buying at these elevated prices? Stats suggest population growth has been stagnant due to a decrease in immigration and a decline in birth rates.

Is it a perception that this is the new normal? A case of FOMO? Expectations too high?

This drives a lot of the conversation being had in this thread. Younger folks staying with parents longer, suboptimal future outlook, etc. Locally all I see are new subdivisions, apartment complexes and condo's being built everywhere. Where's the demand coming from if the population stats are what they are?

A good question. Not to mention X number of boomers passing away each day. SOMEONE is buying these homes. Same question with exorbitant rents.

Not to narrow the view, but homes in my new development neighborhood start at $1M. I'd say 80% of them are owned by young families under age 35. I have no idea how they are doing this.

 

[Surewhitey]

Again, those of you positing that it’s just a matter of discipline for generations that have followed are overlooking how wages haven’t kept pace with essential costs, the discrepancy is huge. Here’s just an example related to housing. I know auto, health care and education costs have also increased much faster than wages, I suspect taxes (all kinds) have as well among other expenses.

Whether you can admit it or not, it was much easier to be disciplined when Boomers were accumulating…we were luckier.

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I always wonder why the average home prices are so high when a decent starter here in the city can be found for less than half that. Maybe "they" should not expect to buy what us old X-ers have. I know some markets don't have this... We have lived many places & found DFW to be very affordable unless you require 3k sq ft.

 

[Flieger]

I always wonder why the average home prices are so high when a decent starter here in the city can be found for less than half that. Maybe "they" should not expect to buy what us old X-ers have. I know some markets don't have this... We have lived many places & found DFW to be very affordable unless you require 3k sq ft.
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Exactly.... I don't understand when "starter home" ownership and building your way up became such an impediment.

Flieger

 

[Luvtoride]

I always wonder why the average home prices are so high when a decent starter here in the city can be found for less than half that. Maybe "they" should not expect to buy what us old X-ers have. I know some markets don't have this... We have lived many places & found DFW to be very affordable unless you require 3k sq ft.
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Surewhitey, but it’s much different in other parts of the country, like NJ/ NY area where we and our grown kids live. I don’t expect that Millenials will move away from their families and friends just to buy a home in a less expensive part of the country.

 

[Surewhitey]

Surewhitey, but it’s much different in other parts of the country, like NJ/ NY area where we and our grown kids live. I don’t expect that Millenials will move away from their families and friends just to buy a home in a less expensive part of the country.

Agree, but choices come with costs. I've lived in IL, AR, TN, LA, TX, CA & out of the country. All came with a choice for getting ahead (sometimes roommates) or choosing to live there. If I had stayed where I was raised, it would be fine. I chose to step out of the comfort zone and see the world. Every place we lived had affordable (to us) housing...

That home I showed was 5 miles from million dollar homes...

 

[Flieger]

Surewhitey, but it’s much different in other parts of the country, like NJ/ NY area where we and our grown kids live. I don’t expect that Millenials will move away from their families and friends just to buy a home in a less expensive part of the country.

Generally a commiserate salary difference as well. I was offered a position several years ago at corporate office in LIC, with a 40% increase. Pay was not the reason I chose not to live there.

Flieger

 

[Koolau]

Again, those of you positing that it’s just a matter of discipline for generations that have followed are overlooking how wages haven’t kept pace with essential costs, the discrepancy is huge. Here’s just an example related to housing. I know auto, health care and education costs have also increased much faster than wages, I suspect taxes (all kinds) have as well among other expenses.

Whether you can admit it or not, it was much easier to be disciplined when Boomers were accumulating…we were luckier.

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I don't know how to compare my generation (Boomer) to the current generation(s) but I can tell you that the mid 70s was a frightening time to be hoping to buy a house! It was frightening to go to the store and buy what you bought last week and see that it had gone up (again!) from the week before.

I've shared that after we DID manage to buy a house with a huge percent mortgage rate, our heating fuel (propane) increased in price from 16 cents/gallon to (wait for it) $1.20/gallon all within a year. I assure you that my wages did not make up for that and the other accelerating price rises.

My point is that there are "issues" that each generation faces and saying one generation had it easier than another is problematic. I look at the current safety factors offered by gummint and can assure you they didn't exist when I was trying to save up a down payment for a house or pay to heat my home!

Oh, and re: taxes: I fell into AMT in the mid 70s!!! I don't even do that now! I was making a barely-living wage back then.

 

[Mr. Tightwad]

I don’t think they are thinking beyond living for today

This statement made me recall a conversation.

A Gen Zer I spoke with said "The stock market is for old people, it takes 30 years to get rich. I'm buying bitcoin".

It appears to me the younger folks are a bit impatient with the process of accumulation, and they "want it now".

 

[Teacher Terry]

How can we TELL our Millennial children what they should do?! I can’t even broach the subject with my daughters or their husbands. My younger daughter is going thru a job change right now and all I can do is ask her about benefits, 401k match etc. I don’t think they are thinking beyond living for today and raising their kids. We help out quite a bit by paying for certain extras for the kids like summer camp.
Any suggestions for having a real discussion with them?

I follow what my parents did and I only offer advice if I’m asked. I had a really good relationship with my parents and I have strived to have the same with my kids. Their dad and I have discussed when they were younger what we thought they were doing wrong amongst ourselves but we never offer any unsolicited advice)).

 

[Koolau]

I don't know whether it's harder or easier today than when I was starting out. I do know that being smart about the need to figure it out for myself, having a positive attitude in the face of adversity, delaying gratification in service of a larger goal, and flat out working my ass off in always difficult and sometimes dangerous conditions, were the things that got me to where I wanted to be. I suspect that those who have the same qualities will do well today.

Completely agree.

I guess my question would be whether the younger generations ever saw parents doing exactly as you describe. Both my parents survived the GD and dad was "disabled." My parents w*rked hard into their 50s. I saw that and just assumed that "That's the way you do it." I won't lie and suggest I never whined about it, but I knew that my parents did it and I could do it too. I only had to w*rk hard until I was about 30. So not much room left for whining (but I admit to it occasionally - heh, heh, especially here)!

 

[Koolau]

I don't know. We had it hard, not much education and were hungry for food and a better life.

When I started coding in the early 1980s I met a guy who also had a different start. We both figured if we did things others said were impossible we'd get ahead. He was a dreamer and I could see his vision. We spent a lot of late nights together, and were rewarded.

I'm not sure I followed a traditional approach. Megacorp was a huge influence in allowing me to RE.

Yep. For all its flaws - and there were many - I still thank God that I got to w*rk at Megacorp. Heh, heh, it's still paying me with the stock I kept all these years!

 

[Montecfo]

I think attitude and resilience are the two keys, no matter the generation.

 

[Route246]

My first 7 years out of high school was in the military. I didn't have any credit cards because no one would give me credit. It was frustrating to wait to have cash to buy anything that was of value; a throw rug for example. $50 took me 2 or 3 months to save for. I had no idea how to save, we were in survival mode. Especially when I was deployed. My wife would go live with her parents, which sucked. They thought I was a deadbeat. Remember back then, no one thanked me for my service, let alone respect the assignments we were performing. I got lucky when I got out, after a few jobs in technology, I got hired on at the local electric company, union job, contract and the pay/benefits/pension was a mindblower. I've always said that it was better than winning the lottery because I enjoyed the work and it paid so well. An older employee recommended I start investing in an IRA. He explained why, even though I had a generous pension and only 29 years old. My motto has always been; take advice when you ask for it and only ask for it from people you respect. I took his advice and was FI by the time I was 45. After retiring at 55, I found no one, zero people, who would ever become financially independent. I learned to shut my pie hole when it came to explaining how I got lucky. People were jealous, some angry even, that they were smarter, more intelligent than me and I somehow was unscrupulous in gaining my wealth because surely, no one with my education, employment background should be able to be FI at my age. I eventually quit telling people I was retired and let them think I was an independent consultant for military contractors and I wasn't at liberty to go into details. After a while, I realized I didn't want to socialize with people I had to lie to in order to be accepted. I know other people; neighbors, church attendees, etc. but not so much I'd call them friends that you have over weekends for BBQ and a beer, or a quick call to come lend a hand when you have a 2 man job and need some help, or to borrow a tool.
Younger generations treat me like I'm a fossil and patronize me, humor me and call me 'pops' not out of respect, but as a slander. A common term, I'm sure you've heard it too, O.K. Boomer. Especially frustrating when they whine that we had it easy, they have it tough and are not at all interested in learning what I know to get to where I am. Afterall, it didn't take any effort like they have to do. So I keep my mouth shut, including or should I say, especially when it comes to politics.

You left some blanks in this description but I'm pretty sure you probably had the attitude that non-FI types would call deprivation was what you consider rational, focused choices. I avoided $6 coffee, $8 Jamba Juice and usually drink water with meals at restaurants. Even though I could afford it I avoid those things and I also avoid them when someone else or my company was paying for it. My behavior is always consistent. I would reckon that yours is similar. It is the little things that make a difference for me.

 

[Route246]

How can we TELL our Millennial children what they should do?! I can’t even broach the subject with my daughters or their husbands. My younger daughter is going thru a job change right now and all I can do is ask her about benefits, 401k match etc. I don’t think they are thinking beyond living for today and raising their kids. We help out quite a bit by paying for certain extras for the kids like summer camp.
Any suggestions for having a real discussion with them?

From my own experience growing up and from my perspective the fact they won't have a real discussion is a symptom of entitlement bordering on disrespect more than not. This is just my opinion as the grumpy old man. If they won't even acknowledge your points of view and listen to them then somehow they lost the elder respect compass. I often had "roll the eyes" moments when talking to my parents growing up but I never, ever discounted, disputed or disagreed with what they had to say. I may have a different opinion on something but I never judged my opinion to be in disagreement, just a different perspective and I was never so self-righteous or disrespectful in believing their takes had no validity and mine were better than theirs. My parents were not outspoken and let us live a free childhood for the most part. They trusted us and hopefully we did not disappoint them. Certain things were non-negotiable like graduating from college because they never had that opportunity and they made it clear to us that we had no choice in that matter, full stop. It is not difficult to achieve that goal if you are conditioned to believe you have no choice. You just plan and prepare for it and everything just works out.

Do you sense they are waiting for you to die and will cash out accordingly when that time comes? Sadly, I have many friends and classmates who lost parents, inherited life-changing money (for them) and they wasted no time in spending it and letting the world know about it. I have this personal thing and my wife still shakes her head about it but I told her when my father was getting close to the end that we should refresh our cars a little early and make sure we got them before he died. She asked me why and I told her I don't want anyone to think that I profited off losing my father and gaining the inheritance. As many here know, we lived the "stealth wealth" life so nobody knows how much we had (they do now due to the recent home purchase which they can see on Zillow) and it would turn my stomach to dishonor my father that way. It is just a quirk I have.

 

[G-Money]

How can we TELL our Millennial children what they should do?! I can’t even broach the subject with my daughters or their husbands. My younger daughter is going thru a job change right now and all I can do is ask her about benefits, 401k match etc. I don’t think they are thinking beyond living for today and raising their kids. We help out quite a bit by paying for certain extras for the kids like summer camp.
Any suggestions for having a real discussion with them?

At some point, adult children need to be treated like....adults. If they're married, they're adults. That means not providing financial advice unless asked. Not freely lending money for problems they could have seen coming and prepared for themselves. Stand back and watch, hard as it may be. It's one thing to spoil the grands and choose to do things for them, as your grandchildren. It's another thing to be covering expenses that the parents should be covering. Summer camp, I can see that as a special treat for the grandkids.

 

[Original Wally]

I think it is mostly a mindset. When DW Molly and I were young, I worked full time and went to University nights. LATER, after graduation, I worked full time, had a 2nd part time job AND a seasonal 3rd part time job. Did that pattern for YEARS. NOW we are doing well. Shrug. YMMV.

 

[Diogenes]

If that is the case, it is a 180 degree view change from my parents (who were immigrants) DW and her family (who are immigrants), and my peers in the predominately immigrant community I grew up in. One came to America *because* it offered protections of property and possessions that were not afforded in their native countries. I'm curious, what exposure, if any, have your students had to American civics?...

I teach engineering, and so, have little reckoning of what students learn in Gen-Ed or in high school. But with all due respect to your achievements and the wholesome and salutary inculcation in the new-generation by the old, in your community.... well, such things vary from community to community.

Let's take two illustrative examples, without naming names. Joe is from Immigrant Group A, and Jack is from Immigrant Group B. Joe's group were all about fleeing political oppression and ethnic strife. They weren't going "to" anywhere... they were only going "from". Jack's group looked to America as a specific destination for economic opportunity. Joe's group was all about survival. Jack's group was all about rising economically through effort, grit, self-improvement and calculated risk-taking. Jack's group saw the seeds of such behavior in their home-culture, but were stymied by corruption, lack of infrastructure, and a cultural ethos that either panned wealth or viewed it as result of mere chance. Joe's group spent several generations viewing wealth as necessarily ill-gotten and downright sinful, and before that, wealth as something available only to the aristocracy and maybe the Church, while mere peasants toiled relentlessly for no gains, finding their final release only in death.

Consequently, Jack's group will raise children who'd make the OP proud. These kids will seek to do their parents proud, by studying hard, applying themselves to majors with good employment prospects, doing their best at work, saving, learning how to invest, and possible retiring early. But in Joe's group, the children will be raised to regard risk-taking as a worthless gamble, and hard work as just being a shill for The Man. Those kids, when they acquire some money, will spend it on Swiss watches, fur coats, an S-class Mercedes, and maybe a luxury vacation here and there.

 

[donheff]

We are a self-selected group. My experience was much like the OP's, except that I was a knucklehead through my 20s. My parents were frugal and were able to put 4 of us 6 kids through college on a single income. The other two chose not to go. My generation of my family put a much smaller number of kids through college on two incomes. Many, if not most of my peers, left their kids saddled with student loans because they had no choice, despite two incomes. Many, if not most of my peers were knuckleheads in our youths, like I was.

The current generation seems about the same to me. Many will remain undisciplined throughout life. Others will become the ERdotOrgers" of the future. My 16 YO grandson has been investing most of his work earnings and gifts for three years. I started his custodial brokerage account with $200 in a total market index fund. Now it is at about $25,000. No way I would have been able to achieve that.

 

[G-Money]

I know some markets don't have this... We have lived many places & found DFW to be very affordable unless you require 3k sq ft.
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I think I described in another thread, my starter home was $450k. It resembled the picture above.

That was more than 20 years ago. I was only about two years out of college.

And so goes the cost of living in a HCOL. VHCOL, actually.

Significantly fewer people can afford to do what we did in the same area with the same house. That house is now worth about a million bucks and it's the same house aged another 20+ years. This scenario repeats over and over and over where the best and highest paying job opportunities exist, although not always on this crazy of a scale. Cities can only expand so much and folks can only move farther out for affordability, to a point: Once a commute hits about 2 hours each way, that's where most people throw in the towel. 4 hours commuting on an 8, 10, 12 hour day at at office or job site leaves little time for anything else, so, what's the point, then?

Nobody is wrong about hard work or saving money or setting goals. But what's happening with pricing and homes and economic opportunity can't be ignored. It's less accessible.

 

[marko]

I think I described in another thread, my starter home was $450k. It resembled the picture above.

That was more than 20 years ago. I was only about two years out of college.

And so goes the cost of living in a HCOL. VHCOL, actually.

Significantly fewer people can afford to do what we did in the same area with the same house. That house is now worth about a million bucks and it's the same house aged another 20+ years. This scenario repeats over and over and over where the best and highest paying job opportunities exist, although not always on this crazy of a scale. Cities can only expand so much and folks can only move farther out for affordability, to a point: Once a commute hits about 2 hours each way, that's where most people throw in the towel. 4 hours commuting on an 8, 10, 12 hour day at at office or job site leaves little time for anything else, so, what's the point, then?

Nobody is wrong about hard work or saving money or setting goals. But what's happening with pricing and homes and economic opportunity can't be ignored. It's less accessible.

Reminds me of the Yogi Berra overcrowded restaurant joke "if this place keeps being crowded like this, they're gonna go out of business "

SOMEBODY is paying the prices. If they didn't, the prices would come down.