Warning: rant against financial stupidity ahead!
Apparently it’s news that young people aren’t saving their money. In fact, they have a savings rate of negative 2%, which means they’re using up their assets and/or going into debt.
Now, as a young person who spends my days with other young people, this doesn’t surprise me in the slightest. Listen to what one of the foolish young women mentioned in the article spends her money on:
“I’ve been saving almost exclusively in my mind,” said 26-year-old Emily Turner, a 2010 graduate of Villanova University who lives in southern Maryland. Most of her paycheck from the digital consulting and web-design firm she works for “doesn’t even make it to a conventional bank account. I’ve certainly not had the opportunity to invest in stocks or anything.”
The money mostly went to her social life and travel, she says: a trip to Central America, a wedding in Southern California, a bachelorette party in Austin, Texas, trips to Atlanta and Charlotte, N.C., to see friends, another bachelorette party in Austin.
Here’s a tip, sweetheart: the trips are unnecessary. There are few things in life that are as useless and stupid as a bachelorette party. (Especially the destination ones where the foolish bride and her friends drop a fortune on plane tickets, hotels, and various assorted crap.) The wedding may have been unnecessary: unless it was for a best friend, there’s no shame in gracefully declining the invitation and sending a nice gift in the mail. (Gifts can be expensive but not as much as plane tickets and hotels!) And I’m all about going to see friends who don’t live close to you—but if it cuts into your ability to actually save money and even puts you in debt, then I say stick to Skype for now.
“But Natasha,” you say, “you’re no fun at all! You sound like some bad-tempered old person railing against the young generation.” Well, yes, I guess I am railing a bit. I’m not old though, nor bad-tempered (and let me say that I don’t think older people are, as a rule, bad-tempered, just to be clear). I’m just all about fiscal responsibility. Let us examine what Ms. Turner’s financial situation is, as described at the end of the article.
For Ms. Turner, debts include $5,000 in student loans, $3,000 on credit cards and $6,000 borrowed from family. “There’s no formal note for that, but it resides in my psyche that I will pay it back at some point,” she said.
“I know I shouldn’t have accepted credit so freely,” she said. “But part of youth, the wiring of a young person, is the focus on really short-term gratification.”
Compared to what some people owe, $5,000 in student loans isn’t bad. But $3,000 in credit card debt? Are you joking? I can’t even imagine. Does she not know how high those interest rates are? Does she not know how to calculate the incredibly large amount of interest she’ll pay? If she doesn’t, someone at would be more than willing to show her the calculation, I’m sure.
Let me just put it this way: if you have $3,000 in credit card debt, you should not be traveling until you’ve paid it off. It’s as simple as that.
And people wonder why the country is in such a crappy situation politically. Though the answer to that is complex, part of it is because people like Ms. Turner, who possess absolutely no common sense whatsoever, are voting in our elections. Apparently the lack of common sense extends to politics.
Seriously, if you don’t know how to save money, I am going to give you my main tip for doing so. Keep in mind that I can save money like nobody’s business. Are you ready? Here is the single most important thing you can do to keep more of your paycheck in your bank account:
Stop spending money on alcohol.
I observe what my coworkers and friends spend their money on and that is the single biggest drain on their finances. Alcohol is really expensive. And buying it adds up really, really quickly, especially when you go out for drinks three or four nights every single week. (Don’t believe me? Read this blog entry in which a young woman keeps track of what she spends her money on for a week. Yes, I know she lives in New York, but the amount spent on alcoholic drinks is just insane. Food is a close second, though.)
Of course, people are free to spend their money on what they want. If you love going out on the weekends, by all means do so. But don’t go around whining when your bank account has no money in it, you’re up to your ears in credit card debt, the debt collection agencies are harassing you at all hours of the day, and you just got denied at that new apartment complex you want to live in because your credit score is in the toilet.