And even if our hard earned knowledge based on life's experiences is then ignored (don't forget that we were once young and foolish too), it will be worth the effort. We will feel better for having tried, and, besides, it just may be useful to them down the road, if not immediately.
Keenan posted earlier today about the power the Pygmalion effect can have on the performance of children as they go about living up to their parents' and others' initially-thought-by-us-to-be-unreasonable expectations in school.
As Keenan points out, we often are able to achieve 'impossible dreams' if we are encouraged and expected to perform at a high level. We're all capable of being A students, in other words.
And here's how it happens. The initial expectations of our parents (and often others as well) in time are internalized by us and become our own expectations and goals. When all those things come together, good things happen.
And the Pygmalion effect applies to young adults as well. So in addition to encouraging and expecting them to work hard to get a solid education and make lots of A's, we can help our young students on their way to adulthood in countless other ways as well.
When the young student graduates from high school and enters the work force, trade school or college, he unofficially enters adulthood and is a member of the 'real world.'
Accordingly, 'Real World 101' should be a required course for each young adult. If our young friend then engages in a lifetime of 'learning by doing' and is "expected" by parents and friends to avoid taking on unnecessary debt, he or she will be perfectly positioned to regularly save and invest upon entering the work force. That in turn will go a long way to earning an A in 'Life 101.'
Should boomers give millennials money advice? is worth a careful reading:
According to a survey Fidelity Investments released on Wednesday, 47% of individuals ages 25 to 34 are saving for retirement. Overall, 43% are putting money into a 401(k) plan, while 23% have individual retirement accounts (IRAs).
But about half of millennials aren’t saving for retirement at all. Aside from shortchanging their retirements, the slackers are “potentially leaving (free) money on the table” in the form of employer matching contributions, says Kristen Robinson, senior vice president at
Fidelity believes one way to motivate those who aren’t saving is to enlist the aid of their parents. In part, that’s because the Fidelity survey echoes previous findings—from the Pew Research Center, among others—that indicate the millennials and their parents share tighter bonds than previous generations did.
Overall, 60% of respondents say their parents are good financial role models—a high vote of confidence, given the challenges many families encountered during the recent deep recession. Perhaps as a result, when asked who they trust as a source of financial advice, 33% of millennials put one or both parents at the top of the list. (More specifically, 14% said they trusted their parents the most, 11% said they trusted their mother the most, and 8% trusted their father the most.)
There’s certainly a vacuum for the parents to fill: Only 13% of the millennials surveyed say they trust financial professionals the most for money advice, and 25% say they trust no one.
To instill good savings habits, parents of millennials should have money talks with their children around the time of key life events, such as college graduation and before a first home purchase, says Robinson. Millennials also need their parents’ help to cope with information overload.
At the other end of the spectrum are the 25% who say they don’t trust anyone—including their parents. Amid the recession, “many became skeptical of financial institutions,” says Robinson, who speculates that those in this camp may also have seen their parents prove themselves poor financial role models since 2008. Indeed, the average boomer isn’t in great shape with regard to retirement saving: In 2013, the median household between the ages of 55 and 64 had only $111,000 saved in their 401(k)s and IRAs, according to a recent survey by the Federal Reserve.
Otherwise, the survey indicates the millennials are serious about saving. Their top three financial goals are to: accumulate more savings for retirement (52%); pay off credit card debt (41%) and pay off student loans (28%)."
Summing Up
Worthy goals, one and all.
Now let's encourage and expect the next generation not to take out student loans and to begin saving and investing at an early age.
Course 'Life 101' starts with avoiding debt to attend college.
And that college debt avoidance mentality requires an early dose of Pygmalion, and being advised that saving is a better habit than borrowing.
That's my take.
Thanks. Bob.
I remember eating at T-Bonz shortly before leaving for my freshman year in college and listening to you tell me about the credit card companies that will be on campus signing students up to borrow money to buy things. And that the payments to these companies are likely to be much greater than the original purchase because of the interest, and in this case the insanely high rates of interest that can be assessed if payments aren't made just so. And that once faced with ballooning payments, young adults default to making the "minimum monthly payment," which assures that the debtor stays in debt, with a high rate of interest, and the credit card company keeps a long term customer who makes periodic payments. When I got to school, the credit card and long distance phone companies (this is 20 years ago) were giving out free T-shirts during registration to get students to sign up. I declined. Many of my classmates got the shirt. And the money. And the payments. I'm glad we went to T-Bonz.
ReplyDelete