Thoughts
American youth entitlement culture
Melinda, 25, has just posted on Facebook how she's booked upcoming trips to Las Vegas, Miami, and Toronto. People who know her know she's the type who goes on these trips with three priorities: shopping, clubbing, and lounging by the pool. Friends have joked about her regularly posting links to expensive clothes on her timeline, wondering where she gets the money.
Darien, 24, drives around in a brand-new Ford Mustang that he customized with rims and a nice stereo. He wears Diesel jeans, Guess shirts, and Fossil watches. He also makes it a point to buy every new iPad and iPhone when they come out. Weekends for him are usually about cruising to the clubs and getting a booth with bottles of vodka, generally $250 per bottle.
Melinda and Darien both sound like they have fun lives, but there is a catch. Melinda skipped college and works as a low-paid receptionist/assistant for an insurance company, and Darien has just graduated from college and is working an entry-level position in an ad agency. Both live at home with their parents, have zero savings, and loads of debt. This lately seems to be a common story with much of America's youth.
Now Melinda and Darien are not real people. I created their lives based on observations of many 20 somethings I've encountered in the last ten years. I'm sure we've all seen or encountered someone like them. As you sit in your frugal lifestyle, wondering if you'll be able to pay all your monthly bills in this economy, you still spot colleagues and coworkers who seemingly are living lifestyles that can't be afforded by the personal revenues they bring in.
Houston, we have a problem
In my opinion, American youth (late teens to late 20-somethings) has an entitlement problem. I'm not speaking of the typical political debates of health care, Social Security, and welfare, but more of this "keeping up with the Joneses" or "I deserve it" mentality many live by. They aren't making much money, have few responsibilities, and yet want to live the lives they see lived by celebrities and other personalities who can afford that.
Melinda's case is one I've encountered many times. Young girls wanting to "live it up" while they're young. They shop too much for expensive clothes, often citing how they found deals at outlet stores and such, but still buying very expensive items. They take many trips on money they don't have, and yet seemingly do not think about where they'll be at age 30 and up. Some of these women even have children!
Darien is the same deal, but he (like many in his position) believe by the time he reaches age 30, he'll be pulling in a six or seven figure salary. He believes his college education and ease of landing a job right out of college means he'll just move upward and never see a problem. He spends as if he'll see his personal revenue grow to a point where he could pay it all off easily, but never factors in catastrophes like getting laid off and being unemployed for a long period of time...things many college grads have faced, including me.
According to experts, it's been stated that roughly 30% of all 20 somethings entering the workforce will be saddled with $10,000-$25,000 in credit card debt. There isn't even a mention of how many more will be sitting on $5000-$10,000 in debt. Maybe to someone older this seems manageable, but to a 20 something either making a crappy entry-level salary or struggling to get a career started, it can still be a lot.
Looking at my own life
In my own past, I've had my troubles with credit debt. I've made my mistakes and I learned from them. I've thankfully never run up a balance greater than $8000 in that time, but I too tried to "have things" that perhaps I should have learned to live without.
I've mentioned other times how my post-college employment was shaky due to the recessions that hit before and after the dotcom boom. Still, I made some of those same mistakes. I would buy some records, or a new piece of DJ gear, or a video game, or go out, or even some clothing, and I'd think it's easy to put it on the card and pay it later. I also set up a membership to a health club on this card and had the monthly dues taken out. Let's not forget student loans I had at that time.
The problem really hit when I was unemployed and struggling. Suddenly I couldn't make payments because I had no income. I could not land a McJob with my college degree speaking loudly on how I'm overqualified, and yet bigger companies wanted someone with more experience.
I thankfully never had to go to bankruptcy, and managed to pay things off in my own ways. Even now I ran up some debt again due to some unforeseen expenses, but I know I can pay it off and I will. I just see others who I know don't make as much money as I do, living lifestyles I myself could not afford, and wonder how soon until they get hit with hard reality.
What the youth can do
Do you think you're like Melinda or Darien? Somewhat like them? Do you see a balance on your credit card, look at your job, have no job, and are worried? Don't fret. I'm no financial guru, but here's the lessons I learned from my own past:
See the difference between your lifestyle and the lifestyle you desire. You might see cast members of reality shows driving around in fancy cars and wearing expensive clothes. You're not them. You might see one or a few colleagues who came from wealth and thus can spend loads of money. You're not them.
This isn't some "accept your place in life" message, but more a reality check that owning an expensive car, every new hot gadget, wearing expensive fashions, and taking several trips a year isn't a lifestyle afforded to a secretary, retail, or entry-level worker. You're not entitled to have this life because you made it out of your teenage years and into your 20s. It's not a "rite of passage".
Be selective on your purchases. Now I understand how some expensive things are just better than lower-priced ones. I know. I like Levis jeans over the less expensive Lee and Wrangler. I spend the extra because I know they will fit me well. Darien might think the same way on his Diesel jeans, but perhaps he doesn't need to then buy $100 shirts from Guess when stores like Kohl's and Sears might have nice, fashionable shirts that look as good. I don't care what you might think, no one looks at others and instantly recognizes labels unless it's something specific or unique. You can walk into a club full of people in jeans and not know if they spent $200 on the jeans or $20.
It's the same with Darien's car. Does he really need a Mustang? If cars are very important to him then he should get the car, but not buy every new Apple gadget and spend less on clothing. He should go out clubbing less, and plan to bring a load of friends who all might chip in on that expensive bottle of vodka. It's about picking what's most important to you and leaving the rest behind.
Make your credit rating the priority. My mother always pushed this on me, and she was right. We see people file for bankruptcy like it's nothing and act like they'll be ok. I have friends who have trouble now landing a decent job because they have a horrible credit rating. One who can't even rent an apartment because landlords are scared of that person's rating and thus question if he will be able to make the monthly rent.
Your credit rating follows you around forever. I know some question the idea of a credit rating and if it's fair, but life isn't meant to be fair. It's there, and you have to deal with it. When I finally landed steady employment after a long period of unemployment, my biggest priority was to rebuild my shoddy credit rating. I ended up saving up a small down payment and put it on a used car that I could pay off in a year. My father at the time was being protective and didn't want me to finance anything, but he even saw how my diligently paying it off helped up my credit rating, and thus made it easier for me to get a mortgage years later. Even now my good credit will help me refinance in these hard times.
Back your credit card purchases with cash. This is always the best practice, despite that most people (including me) do not fully follow it. I watch many fiscally-sound Europeans I've known live on a "cash only" lifestyle, meaning if they don't have the money to buy it, they won't. This isn't totally realistic, especially if you're buying larger ticket items and would rather not carry thousands of dollars in your pocket. Plus some of the rewards credit card companies offer are quite nice if you utilize them.
I personally think one should simply try to back up credit purchases with cash when it's the smaller things: groceries, cell phone bill, eating out, the occasional shopping for fun stuff, etc. I've managed to earn some free flights by running up miles on one credit card, so it's not the "grand evil" some make credit cards out to be. You just have to not think of "I'll pay it off within the year" or "I'll pay it off in a few months" when it's not something big-ticket.
If you end up with debt, don't panic. Make a plan. It happens to everyone, even me. You wake up one day and see your credit statement is in the thousands and you're wondering how this happened. You then recollect the fun times, great purchases, and possibly the auto repair you had to pay for on your credit card because you didn't have the cash.
Don't panic. This happens, and it's manageable as long as you can manage yourself. So let's say Melinda is worried about the $15,000 she ran up on her Visa, and wants to change her ways and get her life in order. She decides to take a second job at a cafe on nights and weekends to earn more money as a start. She should also at least pay the minimums on all her cards every month. This will protect her credit rating, as companies care more if you can pay off debt rather than if you have it.
Melinda should also look into offers that come up to transfer balances for 12-18 months of interest-free time. Even for the charges of a few hundred dollars to transfer, she could buy herself a year to pay off debt with all the money going towards the principal, rather than the interest.
Other than that, she'll have to be more selective on her shopping and travel habits, and tell her friends she can't go out very much. These are things I've done when I found myself in debt. Believe it, it works.
Always think long-term. Another life lesson my parents taught me. The one thing I've noticed about many 20 somethings who end up in debt is they tend to think short-term. I'll hear excuses like "you're only young for so long, live it up" or other "live for today" ideologies. I've never been able to do that. My mind is always thinking ten years from now, and twenty years from now.
Upon research, I've found that little things that a 20something can do now will lead to major rewards later in life. I found that if you sign up for 401K in your 20s, just when you start your career, you can retire a millionaire. This is compared to starting in your 30s and ending up just "comfortable". I know with the mess in the economy ruining many retirement funds, it's hard to sell this, but I still believe it's important to set up some kind of long-term saving over procrastination. Lord knows I wish I knew this when I was in my 20s.
I mentioned when I bought my car, it was about building my credit rating so I could get a mortgage later. This is the kind of thinking many in their 20s and 30s need to live by. There won't be anything "waiting" for us when we get old, and life gets harder when you don't plan ahead on things.
What a parent can do
I'm sure some of you reading this now are not 20 somethings. You might even be parents, looking over at your baby, toddler, or small child and wondering how you can help them avoid the Darien or Melinda mistakes we've all made.
Do an allowance system. I saw that recent video of Tommy Jordan when he publicly admonished his daughter and emptied a clip from a .45 into her laptop. I remember how his daughter wanted to be paid for doing chores, while Jordan felt that he already buys her stuff and thus she should do the chores out of family responsibility.
In the adult world, we don't just work and then our bosses buy us stuff when we need it. We get salaries or wages. We have to work and someone gives us money for our time. Jordan should have done the same with his daughter. Rather than buy her an iPod or some other luxury, he should have made her save her money for it. He could have easily fixed the chores debate by using an allowance as payment for the chores and not buy her stuff on request. The idea is it teaches her how nothing is free in life, and thus she has to earn money if she wants things.
Make your children buy their own stuff. Growing up, I received my weekly allowance. I'd watch my brother at times spend part of his allowance on bubble gum or comic books. For me, I would look at the toy aisles in stores and desire all the new G.I. Joe or Transformers toys. My mother simply told me to save my money and she'll gladly bring me here when I want to buy them.
I took it to heart. I'd stop seeing money as a frivolity and more as a commodity. If I wanted an action figure, my allowance of $5-$10 would buy me one, but if I wanted a $20-$30 vehicle or bigger robot, I'd have to save. The same issue came in when video games came into prominence. Now I'd see it's better to give up candy bars and comics to save up the $30 needed to buy a new game, or even to save up for the new system. It taught me how to value money, which I believe is something many youth still don't fully embrace.
Now you should not take this too far. Necessities should be something a parent should provide. So if your child needs pens and a notebook for school, buy it. If your child needs a laptop to write papers, buy it. Some might think making them buy these items will push more responsibility, but if a child has to spend his $5 on school supplies, he might decide to skip it and deal with the consequences. His teacher might call you saying your child has no pens or paper, but his explanation simply was he felt it's not worth his money.
Show some "tough love" when needed. Imagine you are a parent of Melinda or Darien. You see them at their mid-to-late 20s still living at home, no long term goals, and sitting on a lot of debt as they continue to shop and party like rockstars. You sit there thinking they are spoiled and think you'll always be there taking care of them. I say change that.
Imagine Darien is laid off from his work, and six months later he can't even get an interview. He's in danger of losing his car, his iPhone is turned off, and collection agencies are harassing him. The only help you should offer is to help him formulate a plan. Nothing more. That's tough love.
He's an adult and now he has to face the world as an adult. It amazes me when I see parents now who simply keep feeding the irresponsibility. I'll never forget someone ridiculing me when I was living at home, saving up for a condo. He bragged how he lives in a luxury condo downtown, but neglected to mention his parents are constantly helping him with his payments. What lesson are they teaching him?
Wrapping this long one up.
I know this ended up being very long, but it goes to show this is not a simple subject with simple answers. The whole point to this entry is simply to hold up a mirror to many. Perhaps you're a Melinda or Darien, and thus might rethink if those large balances are ideal, and if you're trying to live a lifestyle you can't afford. Sometimes we all need a reality check. I know I had to face those many times in my past.
How do you handle debt? Do you think you shop too much?
2 Responses to "American youth entitlement culture"
Leetenant on
It's interesting how you put a spin on what is known as "entitlement". The real issue of entitlement is with regards to illegal aliens having access to public services and benefits that they are not entitled to with regards to their illegal status. Another real issue is that government has created and continues to maintain too many entitlements in an economy that continues to spiral downward. As far as I'm concerned it is perfectly fine for a college age student who has a job and lives at home. A lot of people look at the European social model for how our government should run, but not when it comes to family values which I've learned that my European ancestors stuck together for a little while until they went out on their own. This is now frowned upon by our pop culture society because they shit on the family and preach this false sense of independence while promoting governmental dependence. My only complaint is that children should be taught how to manage money starting at the age of 10. I was in high school throughout the early to mid-90's and I can tell you there was not enough of that. We're not preparing youth for the more prominent issues of life which are keeping a budget, paying bills, encouraging entrepreneurship. Our society by enlarge is in decline because we are recycling failed Leninist ideas.
D-Jam on March 17, 2012
Thanks for replying Leetenant.
I think with Government programs, they are necessary, but they need to be more closely monitored and regulated. I don't want to imagine a US without welfare, unemployment, Medicare/Medicaid, etc. However, I also think more needs to be done to really find those in need versus those who game the system.
I also think there is nothing wrong with being in college and living at home. I think it's fine to be at home after college, and even all the way until you get married. The points I tried to illustrate with "Melinda" and "Darien" are those who simply do not want to grow up and live like adults when it comes to their finances.
I agree the youth need to be pushed to be more than just a paycheck, and to value things like a home, or good credit, or savings, or a retirement fund, or a small business...as opposed to just gadgets, cars, clothes, and vacations
