Author Topic: savings rates for millennials hits -2%!  (Read 33146 times)

StashDaddy

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« Last Edit: November 10, 2014, 07:09:59 AM by StashDaddy »

thecornercat

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Re: savings rates for millennials hits -2%!
« Reply #1 on: November 10, 2014, 07:15:18 AM »

From the article: “But part of youth, the wiring of a young person, is the focus on really short-term gratification.” So this justifies it? What really bothers me about this is people not taking responsibility for themselves/their future selves and not holding themselves accountable. As if our ages are somehow holding us captive and preventing us from not being idiots.


Travis

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Re: savings rates for millennials hits -2%!
« Reply #2 on: November 10, 2014, 07:35:19 AM »

From the article: “But part of youth, the wiring of a young person, is the focus on really short-term gratification.” So this justifies it? What really bothers me about this is people not taking responsibility for themselves/their future selves and not holding themselves accountable. As if our ages are somehow holding us captive and preventing us from not being idiots.

Someone had to do the wiring in the first place.

frugalecon

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Re: savings rates for millennials hits -2%!
« Reply #3 on: November 10, 2014, 07:36:07 AM »
I read this article on my commute this a.m. and found myself shaking my head at some of the people they interviewed, like the young woman who went to the destination bachelorette parties. I wonder where they find these people. Of course, if this behavior is the norm, it may not be that hard.

That said, I guess that spending like this is just more important to these people than gaining their freedom. It is just a question of different priorities and values. I shouldn't judge too much, b/c by the standards of this forum, I am a very free spender. And I accept that I will work longer than is the norm in the MMM universe.

Middlesbrough

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Re: savings rates for millennials hits -2%!
« Reply #4 on: November 10, 2014, 08:05:43 AM »
I just love my generation.

frugalecon

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Re: savings rates for millennials hits -2%!
« Reply #5 on: November 10, 2014, 08:29:07 AM »
I read this article on my commute this a.m. and found myself shaking my head at some of the people they interviewed, like the young woman who went to the destination bachelorette parties. I wonder where they find these people. Of course, if this behavior is the norm, it may not be that hard.


Also, destination bachelorette parties? These exist? Maybe she needs new friends...

You must have missed the thread on bachelor parties!

kevinb421

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Re: savings rates for millennials hits -2%!
« Reply #6 on: November 10, 2014, 09:37:06 AM »
Did you all pay to read this article or is there a way around this paywall I am unaware of?


No Name Guy

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Re: savings rates for millennials hits -2%!
« Reply #8 on: November 10, 2014, 10:03:48 AM »
Quote
The Fed’s data also show young Americans are less likely to own a variety of investments and investment accounts than their counterparts in Generation X were at this age, including certificates of deposit, savings bonds, stocks, retirement accounts and other managed assets. The only savings vehicles young people today use more than Generation X did at the same age are transaction accounts.

“They are truly a vulnerable group,” said Annamaria Lusardi, an economist at George Washington University who studies the implications of financially fragile young households. “They don’t have assets to buffer themselves against shocks, and they also have to manage debt.”

Let's see....rack up debt like a drunken sailor, no wait, that's not fair to drunk sailors, since at least they learn their skills in the Navy without going into debt, many of which are actually useful, unlike a $100k double major in Religion and Women's Studies from NYU (google it if you don't get the reference).....then piss away what you do manage on stupid shit, as noted in the article.

But remember, according to that genius /snark/ Helaine Olen and the Billfold, savings are not the way to wealth.
http://forum.mrmoneymustache.com/antimustachian-wall-of-shame-and-comedy/the-billfold-you-dont-get-wealthy-from-saving/

Zikoris

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Re: savings rates for millennials hits -2%!
« Reply #9 on: November 10, 2014, 10:08:16 AM »
Most of my fellow millennials that I know save nothing or close to it, and are in debt. They're also the biggest ER naysayers and genuinely believe that NOT going out to restaurants and bars constantly, buying lunch every day at work, and buying the latest electronics is some sort of horrible existence. It's just such an alien way of thinking to me.


dplasters

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Re: savings rates for millennials hits -2%!
« Reply #11 on: November 10, 2014, 10:23:08 AM »
Wait, how can they worry about millenials savings rates right now... did they miss the part on their own chart where every age cohort is living beyond their means (05-08) and how even with the spike the trend is heading right back down to zero for the older groups?

I fail to see how people under the age of 30 having a negative savings rate is bucking the US trend.  Its 09-12 part that bucks the trend.

Welcome back to the way things were before....  we have a crappy savings rate again!  As a millenial, I find the constant news stories that we are special to be some combination of click-bate and grasping for our money/attention.

DragonSlayer

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Re: savings rates for millennials hits -2%!
« Reply #12 on: November 10, 2014, 10:27:14 AM »
Oh, god, the comments section!!!! The article didn't bother me nearly as much as the stupidity and pure ignorance of some of those posting in the comments. Now I've got to go out for a run to get my blood pressure down.

MgoSam

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Re: savings rates for millennials hits -2%!
« Reply #13 on: November 10, 2014, 10:31:27 AM »
Yeah, this may be a problem for many of them. I do have some sympathy towards my young brethren, as it can indeed by difficult to save once you out of college. Here are some factors that they are facing.

a. Living on their own for the first time (wasn't easy for me).
b. Trying to find a job
c. Student debts
d. Lifestyle influences

That said, they can make their own priorities. I do go out from time to time, but I am very keen on cutting my expenses down as much as I can. I have had some great advantages early in life that have made it easier for me to save, such as saving on rent by living at home for a few years, but there must be a habit of saving/investing, once you get that, it will be so much easier for your entire life.

While it is easy to neg the 2% savings rate, if it means that people are investing, hopefully it will be a positive sign. Many are amazed to hear that I plan on retiring in a decade, until they realize that I have been saving for many years, and that they can do it too.

boarder42

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Re: savings rates for millennials hits -2%!
« Reply #14 on: November 10, 2014, 11:41:38 AM »
the comments section is just full of morons

the feds are keeping rates low so putting money in savings nets you close to 0% return right now. 

man people are just dumb. 

Middlesbrough

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Re: savings rates for millennials hits -2%!
« Reply #15 on: November 10, 2014, 11:48:45 AM »
the comments section is just full of morons

the feds are keeping rates low so putting money in savings nets you close to 0% return right now. 

man people are just dumb.
Yep. Economics people don't want to incentivize hoarding money when the general economy is lagging. They want your money to help businesses.

One Noisy Cat

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Re: savings rates for millennials hits -2%!
« Reply #16 on: November 10, 2014, 12:04:27 PM »
     I hate to wag my finger since I didn't start saving until I was 27 (no IRAs until then).  But at least I had minimal debts and a job with a pension.  I realize a lot of them have heavy debts.  But they also have great savings instruments and time on their side.

HoneyBadger

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Re: savings rates for millennials hits -2%!
« Reply #17 on: November 10, 2014, 12:43:28 PM »
     I hate to wag my finger since I didn't start saving until I was 27 (no IRAs until then).  But at least I had minimal debts and a job with a pension.  I realize a lot of them have heavy debts.  But they also have great savings instruments and time on their side.

Amen!  Just today I commented to a friend of mine that I wished Betterment had been around when I was in my twenties.  I'd probably have twice the net worth I have now.

Left

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Re: savings rates for millennials hits -2%!
« Reply #18 on: November 10, 2014, 12:45:19 PM »
I don't know if this is the entire story, I mean yes it's true but looking at the graph, it looks like it started dropping in about 2012, or 4 years after 2008. Recession in 2008, people went to school because of no jobs, they graduate 4 years later (2012) and now the tuitions are no longer deferred. I don't know if past generations came out of college with no debt or not but the graph with the networth shows about a -$7k difference between networth/debt which isn't all that much if they spent the last 4 years in school full time (most don't work full time at same time)

too bad I can't read it even from google link above, still wants me to login/subscribe

@honey, why betterment? Wouldn't just investing have worked? I mean I don't think betterment gets  better returns than if you had did it yourself and learned things like AA/index/etc. But I haven't used betterment either, it just reminds me of using a target date fund/lifestyle fund or something that has a sliding AA until a date or a set AA
« Last Edit: November 10, 2014, 12:53:10 PM by eyem »

chaitea

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Re: savings rates for millennials hits -2%!
« Reply #19 on: November 10, 2014, 12:57:29 PM »
I don't really like being lumped in as millennial. I was born in the late 80s.

I'm not making an excuse for reckless spending but I will say that it is hard to learn about your finances. My parents being immigrants they scrimped and saved away into RRSPs and the like but I don't think they were all that savvy with what other products were in the market place.

Everything I know about money I had to go out and learn on my own. I feel like financial advisers at the bank aren't out for your best interests, just whatever gets them the most points to their bonus. So where do you turn? To the internet. To MMM and the like. But it's definitely not easy. And at least in Canada, they don't educate you at all about personal finances in K-12.

sheepstache

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Re: savings rates for millennials hits -2%!
« Reply #20 on: November 10, 2014, 02:02:58 PM »
some combination of click-bate and grasping for our money/attention.

It's usually spelled 'click-bait,' but your spelling brings out a different meaning that I really appreciate. I guess I do spend most of my time online clickbating.

Middlesbrough

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Re: savings rates for millennials hits -2%!
« Reply #21 on: November 10, 2014, 02:09:03 PM »
some combination of click-bate and grasping for our money/attention.

It's usually spelled 'click-bait,' but your spelling brings out a different meaning that I really appreciate. I guess I do spend most of my time online clickbating.
Hahaha!

+1

MoneyCat

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Re: savings rates for millennials hits -2%!
« Reply #22 on: November 10, 2014, 02:32:35 PM »
I think Millennials are facing a perfect storm of Internet Age self-obsession and constant catastrophic doom-mongering in the media which has led them to say "Fuck it all!  The world is going to shit and I deserve good things.  I think I'll get a few shots of dopamine in my brain by getting bottle service at an exclusive club and buying new clothes and a fast car."  In the process, they are completely screwing up their futures, but they don't even realize it because they don't think that there is going to be a future at all.

thd7t

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Re: savings rates for millennials hits -2%!
« Reply #23 on: November 10, 2014, 03:07:48 PM »
It looks like the savings rates for all of the age groups run in parallel.  Doesn't it seem likely that the youngest workers also have the lowest incomes?

Megatron

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Re: savings rates for millennials hits -2%!
« Reply #24 on: November 10, 2014, 03:38:21 PM »
I don't really like being lumped in as millennial. I was born in the late 80s.

I'm not making an excuse for reckless spending but I will say that it is hard to learn about your finances. My parents being immigrants they scrimped and saved away into RRSPs and the like but I don't think they were all that savvy with what other products were in the market place.

Everything I know about money I had to go out and learn on my own. I feel like financial advisers at the bank aren't out for your best interests, just whatever gets them the most points to their bonus. So where do you turn? To the internet. To MMM and the like. But it's definitely not easy. And at least in Canada, they don't educate you at all about personal finances in K-12.

But you guys have Gail from Til Debt Due Us Part!

Luck12

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Re: savings rates for millennials hits -2%!
« Reply #25 on: November 10, 2014, 03:58:05 PM »
It looks like the savings rates for all of the age groups run in parallel.  Doesn't it seem likely that the youngest workers also have the lowest incomes?

+1.  But you know  it's easier to just pile on the Milliennials.   I'm sure 20-30 yr olds were not any better at saving money relative to older generations back in the 80's or 90's. 

kite

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Re: savings rates for millennials hits -2%!
« Reply #26 on: November 10, 2014, 05:42:56 PM »
Every Millenial in my family is adorable and I love em to pieces. .....
But they've all found money for tattoos and pot and tanning.
The ladies all get pedicures and the fellas all have fantasy football teams.
They aren't wasting money on cable or cell phone plans.....their folks pay that.  But they do drive nicer cars and drink fancier stuff (wine, craft beer or designer water) than I ever did. 
It pains my eyes to keep theem from rolling when they talk of struggling to pay for tickets to SXSW or Bonnarro; and why they'll never be able to buy a home or save for retirement or even move out of mom's house and make their own breakfast.  But I do it because they are good kids.  Naive,  but good.  And if there's one thing I figured out about human nature is that it doesn't help to lecture or detail someone else's faults.
They'd share their stache in a heartbeat,  too, if I wanted a smoke.  Like I said, good kids.     

clarkevii

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Re: savings rates for millennials hits -2%!
« Reply #27 on: November 10, 2014, 05:46:55 PM »
I think Millennials are facing a perfect storm of Internet Age self-obsession and constant catastrophic doom-mongering in the media which has led them to say "Fuck it all!  The world is going to shit and I deserve good things.  I think I'll get a few shots of dopamine in my brain by getting bottle service at an exclusive club and buying new clothes and a fast car."  In the process, they are completely screwing up their futures, but they don't even realize it because they don't think that there is going to be a future at all.

I think you just nailed it

Deano

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Re: savings rates for millennials hits -2%!
« Reply #28 on: November 10, 2014, 06:27:23 PM »
I don't really like being lumped in as millennial. I was born in the late 80s.

I'm not making an excuse for reckless spending but I will say that it is hard to learn about your finances. My parents being immigrants they scrimped and saved away into RRSPs and the like but I don't think they were all that savvy with what other products were in the market place.

Everything I know about money I had to go out and learn on my own. I feel like financial advisers at the bank aren't out for your best interests, just whatever gets them the most points to their bonus. So where do you turn? To the internet. To MMM and the like. But it's definitely not easy. And at least in Canada, they don't educate you at all about personal finances in K-12.

Well, your last sentence is not accurate, they do educate about personal finances in k-12. I know because I've taught financial literacy and many of my colleagues have as well. It's also in the Ontario curriculum in many places. In fact, financial literacy can be found in every Ontario curriculum document you can find.

Kids being kids however, well, they're not always great with money. Add to that changing societal norms (witness the explosion of pay-day lenders in Canada) and general money idiocy with the masses and you have issues. There is also increasing evidence to suggest that financial literacy taught in schools has almost no effect on decisions made as an adult-financial literacy must be a "just in time" event. 

Food for thought, it might not be the fault of teachers that people can't get their shit together.


Left

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Re: savings rates for millennials hits -2%!
« Reply #29 on: November 10, 2014, 06:32:52 PM »
Deano, I don't think it is taught in american schools though, not much at least. But if I had to guess a lot of the class taught how to balance a checkbook? Or did it teach investing for future as well?

clarkevii

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Re: savings rates for millennials hits -2%!
« Reply #30 on: November 10, 2014, 06:48:41 PM »
I don't really like being lumped in as millennial. I was born in the late 80s.

I'm not making an excuse for reckless spending but I will say that it is hard to learn about your finances. My parents being immigrants they scrimped and saved away into RRSPs and the like but I don't think they were all that savvy with what other products were in the market place.

Everything I know about money I had to go out and learn on my own. I feel like financial advisers at the bank aren't out for your best interests, just whatever gets them the most points to their bonus. So where do you turn? To the internet. To MMM and the like. But it's definitely not easy. And at least in Canada, they don't educate you at all about personal finances in K-12.

Well, your last sentence is not accurate, they do educate about personal finances in k-12. I know because I've taught financial literacy and many of my colleagues have as well. It's also in the Ontario curriculum in many places. In fact, financial literacy can be found in every Ontario curriculum document you can find.

Kids being kids however, well, they're not always great with money. Add to that changing societal norms (witness the explosion of pay-day lenders in Canada) and general money idiocy with the masses and you have issues. There is also increasing evidence to suggest that financial literacy taught in schools has almost no effect on decisions made as an adult-financial literacy must be a "just in time" event. 

Food for thought, it might not be the fault of teachers that people can't get their shit together.

This is not taught in the States. In fact, students are constantly bombarded with the thought that the only way to escape poverty is with a college degree.

MoneyCat

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Re: savings rates for millennials hits -2%!
« Reply #31 on: November 10, 2014, 07:43:10 PM »
I don't really like being lumped in as millennial. I was born in the late 80s.

I'm not making an excuse for reckless spending but I will say that it is hard to learn about your finances. My parents being immigrants they scrimped and saved away into RRSPs and the like but I don't think they were all that savvy with what other products were in the market place.

Everything I know about money I had to go out and learn on my own. I feel like financial advisers at the bank aren't out for your best interests, just whatever gets them the most points to their bonus. So where do you turn? To the internet. To MMM and the like. But it's definitely not easy. And at least in Canada, they don't educate you at all about personal finances in K-12.

Well, your last sentence is not accurate, they do educate about personal finances in k-12. I know because I've taught financial literacy and many of my colleagues have as well. It's also in the Ontario curriculum in many places. In fact, financial literacy can be found in every Ontario curriculum document you can find.

Kids being kids however, well, they're not always great with money. Add to that changing societal norms (witness the explosion of pay-day lenders in Canada) and general money idiocy with the masses and you have issues. There is also increasing evidence to suggest that financial literacy taught in schools has almost no effect on decisions made as an adult-financial literacy must be a "just in time" event. 

Food for thought, it might not be the fault of teachers that people can't get their shit together.

This is not taught in the States. In fact, students are constantly bombarded with the thought that the only way to escape poverty is with a college degree.

I work as a teacher and my school does offer a basic course in personal finance to teach kids about bank accounts and how credit works and how investments work.  This was not offered in my high school when I was growing up and I don't think it is a feature of most other American high schools.

I agree 100% that it's ridiculous that college is being pushed on every student.  My students are constantly being told that they will never make anything of themselves if they don't go to college, when many of them have the aptitude and interest to go into skilled trades instead.  It really feels like I am being forced to push these kids toward the burden of huge student loans and the payback from a college degree just isn't what it used to be unless you go into STEM, business, or fields like accounting.

mm1970

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Re: savings rates for millennials hits -2%!
« Reply #32 on: November 10, 2014, 08:30:42 PM »
I don't really like being lumped in as millennial. I was born in the late 80s.

I'm not making an excuse for reckless spending but I will say that it is hard to learn about your finances. My parents being immigrants they scrimped and saved away into RRSPs and the like but I don't think they were all that savvy with what other products were in the market place.

Everything I know about money I had to go out and learn on my own. I feel like financial advisers at the bank aren't out for your best interests, just whatever gets them the most points to their bonus. So where do you turn? To the internet. To MMM and the like. But it's definitely not easy. And at least in Canada, they don't educate you at all about personal finances in K-12.

But you guys have Gail from Til Debt Due Us Part!
I miss Gail. After I cut cable, I couldn't get her show anymore.  I'm so sad, and I go to the website for it and I'm blocked for not being Canadian.

My millenial coworkers are pretty good savers.  One guy lives with his parents (has a long commute though), but is saving BANK and brings his lunch every day. He's 26.
Another guy is 26, almost 27, and is closing on a house this week with his girlfriend.  Now, he is going to have to commute because he cannot afford to live in this town either, but I'm impressed that he's buying a house so young.

DecD

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Re: savings rates for millennials hits -2%!
« Reply #33 on: November 10, 2014, 08:39:07 PM »
I don't really like being lumped in as millennial. I was born in the late 80s.

I'm not making an excuse for reckless spending but I will say that it is hard to learn about your finances. My parents being immigrants they scrimped and saved away into RRSPs and the like but I don't think they were all that savvy with what other products were in the market place.

Everything I know about money I had to go out and learn on my own. I feel like financial advisers at the bank aren't out for your best interests, just whatever gets them the most points to their bonus. So where do you turn? To the internet. To MMM and the like. But it's definitely not easy. And at least in Canada, they don't educate you at all about personal finances in K-12.

Well, your last sentence is not accurate, they do educate about personal finances in k-12. I know because I've taught financial literacy and many of my colleagues have as well. It's also in the Ontario curriculum in many places. In fact, financial literacy can be found in every Ontario curriculum document you can find.

Kids being kids however, well, they're not always great with money. Add to that changing societal norms (witness the explosion of pay-day lenders in Canada) and general money idiocy with the masses and you have issues. There is also increasing evidence to suggest that financial literacy taught in schools has almost no effect on decisions made as an adult-financial literacy must be a "just in time" event. 

Food for thought, it might not be the fault of teachers that people can't get their shit together.

This is not taught in the States. In fact, students are constantly bombarded with the thought that the only way to escape poverty is with a college degree.

My second grader has to pay rent for his desk via"bear bucks" he earns for various things in class.  they can either spend the bear bucks in the class store or save them for better things.  This is in Texas- so they are starting early teaching budgeting and some level of personal finance here.

dragoncar

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Re: savings rates for millennials hits -2%!
« Reply #34 on: November 10, 2014, 09:10:52 PM »
I wonder if the savings during the recession is just a result of banks tightening access to credit.  I know a lot of them started lowering limits, canceling cards, terminating HELOCs, etc.

Left

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Re: savings rates for millennials hits -2%!
« Reply #35 on: November 10, 2014, 10:18:58 PM »
My second grader has to pay rent for his desk via"bear bucks" he earns for various things in class.  they can either spend the bear bucks in the class store or save them for better things.  This is in Texas- so they are starting early teaching budgeting and some level of personal finance here.
out of curiosity, does desk get foreclosed on if he cant pay rent?

dragoncar

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Re: savings rates for millennials hits -2%!
« Reply #36 on: November 10, 2014, 11:34:36 PM »
My second grader has to pay rent for his desk via"bear bucks" he earns for various things in class.  they can either spend the bear bucks in the class store or save them for better things.  This is in Texas- so they are starting early teaching budgeting and some level of personal finance here.
out of curiosity, does desk get foreclosed on if he cant pay rent?

It's texas, so he probably gets a woopin'

eyePod

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Re: savings rates for millennials hits -2%!
« Reply #37 on: November 11, 2014, 07:33:52 AM »
It looks like the savings rates for all of the age groups run in parallel.  Doesn't it seem likely that the youngest workers also have the lowest incomes?

Absolutely true. I've seen unions that keep lowering the starting salaries and also increasing the credentials required to get in. No shit that they're going to save less.

eyePod

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Re: savings rates for millennials hits -2%!
« Reply #38 on: November 11, 2014, 07:35:18 AM »
Food for thought, it might not be the fault of teachers that people can't get their shit together.

I think we can all agree it's a systemic issue. No one individual's fault.

2Birds1Stone

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Re: savings rates for millennials hits -2%!
« Reply #39 on: November 11, 2014, 09:22:25 AM »
This article sums up my peers perfectly, I hear so many whining about not having money for bills but they smoke, drink, lease/buy cars that are more than a years worth of gross salary, eat breakfast from a deli, lunch from a food truck, happy hour on the regular, blow $100+ dollars at the bar on a football Sunday........yea no money for bills...... -_-

Philociraptor

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Re: savings rates for millennials hits -2%!
« Reply #40 on: November 11, 2014, 09:28:58 AM »
I hate the way millennials get slammed in the media for sucking. Is it surprising that a generation with higher unemployment, lower wages, and insane student debt is having a hard time saving? Couple those factors with typical societal pressures and you have a recipe for disaster!

That being said, I know a lot of my college classmates are saving far above average. My personal rate is a meager 12%, but we plan to ratchet it up to around 35% over the next 5 years. There is hope, educate those who are curious and lead by example.

Cinder

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Re: savings rates for millennials hits -2%!
« Reply #41 on: November 11, 2014, 10:12:10 AM »
Let's see....rack up debt like a drunken sailor, no wait, that's not fair to drunk sailors, since at least they learn their skills in the Navy without going into debt, many of which are actually useful, unlike a $100k double major in Religion and Women's Studies from NYU (google it if you don't get the reference).....then piss away what you do manage on stupid shit, as noted in the article.

I'll just leave this here... http://newstalkkit.com/drunken-sailor-objects-to-comments-about-obamas-spending-funny/

It was written about congress, but I think it applies in this situation as well..

Quote
Objection from a former sailor
To the editor:
I object and take exception to everyone saying that Obama and Congress are spending money like a drunken sailor. As a former drunken sailor, I quit when I ran out of money.

Bruce L. Hargraves
USN Retired
Worland

infogoon

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Re: savings rates for millennials hits -2%!
« Reply #42 on: November 11, 2014, 11:10:51 AM »
I don't really get the way the US media acts like student loan debt is some crushing problem. I can't access the article anymore, but I remember it saying that the average debt was only like $30k or less. If your post-university job doesn't allow you to save that much per year, university wasn't a very good investment.

For some reason a $30k loan on a mid-level Subaru is considered fine to pay off over five years, but $30k for an education that should drastically increase your earning power for the next four or five decades is an insurmountable, lifelong burden.

GetItRight

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Re: savings rates for millennials hits -2%!
« Reply #43 on: November 11, 2014, 11:24:56 AM »
I don't really get the way the US media acts like student loan debt is some crushing problem. I can't access the article anymore, but I remember it saying that the average debt was only like $30k or less. If your post-university job doesn't allow you to save that much per year, university wasn't a very good investment.

A debt that you can pay off in a single year really isn't a big deal. But with typical student loan interest rates, there's also no real need to pay it off. I have no plans to pay off my student loans any sooner than required. Typical interest rates are 3-4% with very small minimum payment requirements, making it an excellent arbitrage opportunity. I expect to still have student loans throughout retirement.

They're probably referring to people like me with six figure student loan debt at interest rates up into double digits and nearly $20k of interest paid each year. I've since refinanced and am making much faster progress, but it's been tough. I know a few people with similar amounts owed and you see quite a few here of them here.

$30k or whatever the median student loan debt is trivial even if at a high rate just refinance and knock it out in a couple years without even having to live a particularly Mustachian lifestyle. Or perhaps shelling out thousands every month for years and barely denting principal has just altered my thoughts on what is a significant vs trivial amount of money.

The problem the media ignores is that tuition rates have been skyrocketing ($5k-$10 yr when I was in school). Schools can charge whatever they want because government ensures banks have little to no risk lending large unbacked amounts to young adults with little or no income or assets. If banks were exposed to risk they would not lend such large amounts unbacked and the amount they would lend would likely vary based on income, assets, major and maybe other factors. Tuition would be reasonable, except at the big name schools marketed to the rich that have always been prohibitively expensive for the masses. Quality of education would increase and price would decrease... But without competition, quality decreases and price increases.

Philociraptor

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Re: savings rates for millennials hits -2%!
« Reply #44 on: November 11, 2014, 11:30:41 AM »


I hate the way millennials get slammed in the media for sucking. Is it surprising that a generation with higher unemployment, lower wages, and insane student debt is having a hard time saving? Couple those factors with typical societal pressures and you have a recipe for disaster!

That being said, I know a lot of my college classmates are saving far above average. My personal rate is a meager 12%, but we plan to ratchet it up to around 35% over the next 5 years. There is hope, educate those who are curious and lead by example.

I don't really get the way the US media acts like student loan debt is some crushing problem. I can't access the article anymore, but I remember it saying that the average debt was only like $30k or less. If your post-university job doesn't allow you to save that much per year, university wasn't a very good investment.

A debt that you can pay off in a single year really isn't a big deal. But with typical student loan interest rates, there's also no real need to pay it off. I have no plans to pay off my student loans any sooner than required. Typical interest rates are 3-4% with very small minimum payment requirements, making it an excellent arbitrage opportunity. I expect to still have student loans throughout retirement.

I think you're overestimating how much the AVERAGE college graduate makes with how much the AVERAGE engineer or other high-earning graduate makes. Lots of these folks barely make $30k their first year out, if they can even get a job. And I dunno about your typical interest rates, but my government-backed Stafford loans originated at 6.8, with Parent PLUS loans at 7.9, with no official way to refinance to the now-lower interest rates.

Philociraptor

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Re: savings rates for millennials hits -2%!
« Reply #45 on: November 11, 2014, 12:20:27 PM »
Personally my sense of what counts as "trivial" has gone dramatically up over the years from a combination of (a) large investment gains and loses, (b) having jobs that pay 4 or 5 times the US median, (c) having to pay more in taxes than many Americans make per year, (d) having to pay thousands of dollars per month for a modest 1 bedroom apartment.

Personally I also feel like $30k is fairly trivial.

The only one that plagues new graduates is D. With that in mind, $30k is far from trivial.

Less

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Re: savings rates for millennials hits -2%!
« Reply #46 on: November 11, 2014, 01:05:11 PM »
I think personal responsibility is very important. I am not saying that the low net worth, low saving millennial individuals who are being typified in this article  have not made poor decisions and are not responsible for their predicament. But I think it is important to think about context.

People who have grown up since the 80s have been bombarded for their entire life with marketing messages pushing consumption. The fact that consumption is now a defining feature of the character is hardly surprising. In fact for every company that engages in consumer advertising, this was the desired outcome! I think parents of the millennial generation have been utterly un-prepared for the intensity and volume of extra-familial social conditioning that has been part of their children's lives. Parents wanting to support and nurture kids in a post war error have raised them with the belief that they can "have it all" while the marketing machine has been quick to pick up and define "all" as all of the trappings, and not all of the fulfillment that our parents might have been referring to.

Among the tut-tutting of the less financially literate, be they millennial or not, we should consider what we are doing to either endorse or refuse consumer culture in our communities. All of us who are reaching great levels of success and financial freedom working for consumer sucker product producing companies, or living a comfortable life in FIRE of the earnings of such companies, should consider the maxim of "first do no harm".

/rant

sorry team. rant over. I know many people here to a lot to lead by example in trying to make their families and communities a better place.

MoneyCat

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Re: savings rates for millennials hits -2%!
« Reply #47 on: November 11, 2014, 02:35:02 PM »
I think personal responsibility is very important. I am not saying that the low net worth, low saving millennial individuals who are being typified in this article  have not made poor decisions and are not responsible for their predicament. But I think it is important to think about context.

People who have grown up since the 80s have been bombarded for their entire life with marketing messages pushing consumption. The fact that consumption is now a defining feature of the character is hardly surprising. In fact for every company that engages in consumer advertising, this was the desired outcome! I think parents of the millennial generation have been utterly un-prepared for the intensity and volume of extra-familial social conditioning that has been part of their children's lives. Parents wanting to support and nurture kids in a post war error have raised them with the belief that they can "have it all" while the marketing machine has been quick to pick up and define "all" as all of the trappings, and not all of the fulfillment that our parents might have been referring to.

Among the tut-tutting of the less financially literate, be they millennial or not, we should consider what we are doing to either endorse or refuse consumer culture in our communities. All of us who are reaching great levels of success and financial freedom working for consumer sucker product producing companies, or living a comfortable life in FIRE of the earnings of such companies, should consider the maxim of "first do no harm".

/rant

sorry team. rant over. I know many people here to a lot to lead by example in trying to make their families and communities a better place.

I really feel sorry for Millennials because they were raised for their entire lives being told that they should find a job doing something that they love and the money will follow.  This is what they were taught from birth by parents and schools, so most of them believed it.  When they got to college, they decided to get degrees in Literature or Art or Theatre or Women's Studies or Philosophy, expecting that these degrees would lead them to some kind of career, because this is what they loved.  The awful truth is that careers are just jobs that people do to earn money so they can do what they actually love on evenings and weekends.  It's easy to blame Millennials for what has happened to them, but, honestly, they were set up from birth to have all these problems because people were unwilling to teach them the harsh truths about life.

galliver

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Re: savings rates for millennials hits -2%!
« Reply #48 on: November 11, 2014, 02:49:46 PM »
Two things...millenials are typically classified as those born between 1980-2000. That means the youngest millenials are freshmen in highschool. The article claims to only consider "adults under 35" of course, but 41% of 18-24 year olds are enrolled in college as of 2012. http://nces.ed.gov/programs/digest/d13/tables/dt13_302.60.asp And while I'm sure someone will pop out of the woodwork saying they got straight As at a top college while working 60 hrs a week to pay tuition...can we accept this isn't the norm?

Then we have several years-worth (if we assume approximately constant birth rates), that are just out of college and probably paying down their loans rather than saving. Unless there is a company 401k match (not an option in underemployment that many millenials are almost certainly experiencing), most people on this forum would advocate paying off student loans ASAP over significant saving, and in fact debt repayment typically gets lumped in with savings rate here. I doubt that was the case for this study.

I'm not saying people from this (my) generation don't make stupid choices...but you can't paint a whole generation with a "bad decisions" brush based on an anecdote in an article. As a generation, we haven't had time to figure things out and overcome the initial obstacle(s) that faced us uniquely, like the recession and student loan debt.

DecD

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Re: savings rates for millennials hits -2%!
« Reply #49 on: November 11, 2014, 05:10:17 PM »
My second grader has to pay rent for his desk via"bear bucks" he earns for various things in class.  they can either spend the bear bucks in the class store or save them for better things.  This is in Texas- so they are starting early teaching budgeting and some level of personal finance here.
out of curiosity, does desk get foreclosed on if he cant pay rent?

It's texas, so he probably gets a woopin'

Hahaha!

I just asked him. They garnish wages if you can't pay rent.  And they get paid weekly but pay rent biweekly, forcing them to think ahead.  They have the opportunity to buy little toys, or extra time in the computer lab, etc. 

It's a start!