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Missing the Point

Richard Quinn

IN EARLY MAY, I wrote about 16 ways that people waste money on everything from tattoos to shoes to children’s toys. That blog was subsequently posted on MarketWatchwhere it collected almost 800 comments, most positive, but many not so much.

I was called out of touch, accused of having an entitlement mentality, talking down to people, privileged and more. I had clearly touched a nerve. Some commenters went into great detail about how difficult their lives were and how there was no money to waste. Others said they worked hard and deserved a vacation. I never said not to take a vacation, just not to go into debt while doing so. Is that unreasonable? One woman took me to task, claiming her children deserved toys. I had noted that U.S. parents, on average, spend $6,500 on toys during a child’s upbringing. Doesn’t that seem even a little excessive?

In short, detailing the ways money is wasted got people’s attention. But many seemed to miss the point—that it’s crucial to live within your means, and that necessitates spending prudently, so you have some savings for financial emergencies and long-term goals.

It’s now clear to me that the way people look at money varies greatly among generations. One commenter said I had a lot of nerve telling people how to spend their money. Hey, I don’t want to dictate how anybody uses his or her money—but I do believe you need to find a way to spend less than your entire paycheck.

In any case, I doubt many millennials would be happy following my example. I’m cheap. But I’m also patient, which means that, at age 75, I’ve reached every financial goal I set when I was 18. Seriously, it’s in my high school yearbook.

The way I see it, younger generations don’t have the same patience. One survey found millennials expected to receive a raise within one year of being on the job. A friend who does hiring for a large financial institution says many of the prospects give off the impression that they’re doing the company a favor by applying for a job, even if they’re just out of college.

Financial prudence isn’t just for the wealthy. In fact, they’re the ones who need it least. And yet my biggest critics seemed to be of average means. They were struggling financially but failed to make the connection between their struggles and their spending. If you can’t convince folks that spending on little things like tattoos, designer coffee and toys all add up, there may be little hope for changing their ways. That raises an important question for society: If we have younger generations who see today’s spending as their top priority, who will support them during their retirement years—or will the whole notion of retirement disappear by necessity?

Richard Quinn blogs at QuinnsCommentary.com. Before retiring in 2010, Dick was a compensation and benefits executive. His previous articles include An Old Man’s GripesMoney Pit and Crying Poverty. Follow Dick on Twitter @QuinnsComments.

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David J. Kupstas
David J. Kupstas
2 years ago

Kids “deserve” toys, families “deserve” vacations, and they’re calling YOU entitled? Heaven help us.

BenefitJack
BenefitJack
2 years ago

Age 65 ain’t what it used to be. The number of working Americans age 65+ has grown from 6.5MM (2011) to 9.7MM (2018) – that’s a 46% increase during the 7 year period shown!

Life expectancy ain’t what it used to be either. According to the Society of Actuaries, for a married couple both age 65, there is nearly a 50% chance that one of them will live 25 years, to age 90, and a nearly 15% chance that one will live to age 95.

And, don’t expect that trend to change – except to lengthen. Roughly 1 person in every 6,000 reaches their 100th birthday today. Fifty years ago, only 1 person in every 67,000 reached the century mark. In the past 100 years, life expectancy at birth has steadily increased by about three months every year. Should that trend continue, at least in the 1st world and absent pestilence, plague and war, each person born in the current century who survives to age 65, will be more likely than not to live past their 100th birthday.

So, who all is surprised to see more and more 65+ year olds working, carrying more debt, buying houses, pursuing higher education, travel, etc.?

And, similarly, advancing age is not a barrier to making spending and savings mistakes. What’s different, as best as I can tell, is that my parents, members of the greatest generation and veterans of WWII, learned about sacrifice as children. They survived the depression; and at least my father had periods where he suffered true food insecurity as a child. He watched his immigrant parents scramble to survive. Listening to his stories (and later, stories about him that his sister told), I heard, over and over, that there was no better lesson in teaching frugality than hunger.

Few American-born baby boomers, Gen Xers, or millennials had similar experiences. It probably does have an impact on their saving and spending habits.

CJ
CJ
2 years ago

I’m in my early ’50s – so Gen X, I guess. When I was growing up in a solidly middle class world, a sit-down restaurant meal was still mostly for special celebrations, not everyday convenience; family vacations meant a road trip and clean, but simple roadside motels: definitely not a luxury cruise, all inclusive resort, or deluxe $400/night digs onsite at Disney.

So when I could afford to do all these things as an adult, it felt so special. I took my first cruise at 50 – and I felt as excited as a little kid. When I dine out, it still feels like a delightful splurge to me.

Today, I see so many kids on cruises, in 4-star resorts, in fine restaurants, etc and it’s literally no big deal to them – I know parents and grandparents mean well, but if the kids experience all the pleasures and luxuries of life now, how much more will it take to satisfy or impress them later as adults? And how much will they blow to buy themselves what “they deserve”?

Mik Barbasol
Mik Barbasol
2 years ago

Buying votes with government handouts is another symptom of a victim entitlement society…and guess who’s going to pay for the handouts…it ain’t the “rich”.

medhat
medhat
2 years ago

I say keep fighting the good fight, you can only lead horses to water. I have a theory as to why the pushback and general recalcitrance. In aggregate, the significant increase in standard of living in post-WW2 America set the baby boomers on a path with a marked upslope of prosperity. Their children, Gen X through early Millemials, have that prosperity as a baseline, and again (in general), are mostly disconnected from the “greatest generation), whose sacrifices, both in war and peacetime, made that prosperity possible. I don’t have the wherewithal to forecast what that means for our future, but saving has always seemed to me about the best insurance around.

Bart Moran
Bart Moran
2 years ago

I’ve worked in the consumer financial services sector for three decades. Here’s my observation: people love to borrow money, it makes them feel rich. Secondly, people hate to save money, they fear they will go broke doing so. I’m confused, but our lending business is booming.

Jim Wasserman
Jim Wasserman
2 years ago

Thoughtful piece.

I absolutely agree much of the problem is that Americans have poor spend versus savings habits. I would not be so quick to damn millennials, however, for their circumstances, especially as compared to the older generation. Data (https://www.debt.org/faqs/americans-in-debt/demographics/) indicates 1. People 65+ have almost as much debt per person as millennials, and 2. Much of millennial debt is due to the rising cost of college tuition, a factor we did not have to deal with.

I’d also say it’s hard for us to blame the fruit of our teaching. As you rightly show, parent indulgent attitudes make their children have the views/habits they do. As well, it was the older generation that opened up financial colonization of millennials while they were naive. Credit card companies preyed upon young college kids by giving them “free” credit cards upon registration, knowing that debt would be accumulated.

Finally, most debt to earning imbalance is not among the poor or even working classes, but by the upper middle (aspirational classes) that go on the vacation junkets rather than save for retirement and assume things will work out.

In the end, the answer (always for me, at least) is financial education starting early.

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