In Their 20s, Struggling to Save and Tired of Being Lectured About It
nytimes.com
nytimes.com
The second example is a lady with 76k in debt, who has managed to pay down nearly 70% of it. Somehow this doesn't qualify as savings to the author.
The third woman actually makes a lot (they won't say how much) and has "achieved financial stability" (thus undermining the thesis of the article), but sends "the majority" of her paychecks to her family.
Finally, by the fourth example: someone with three jobs, who still manages to save $200 a month! I do feel for her, though. (Note to author: why in the world would you bury this example??)
The fifth example spends on expensive exercise classes and "also likes to go out to dinner with her friends"...but still saves $600 a month.
For the very last example, we have a 28-year-old man, earning well below average in NYC (90k a year), who nonetheless saves $2,000 a month. I'm sensing a bias here.
This is a ridiculous article. It should be titled: "These 20-somethings mostly manage to save despite difficult life choices and low incomes, and so can you."
This is an unfair dismissal. Most industries are not high paying, therefore most workers are not earning enough to save. You're basically saying "they're not saving because they're not earning more!" Also, what is your proposed solution here? To stop having social workers?
> someone with three jobs, who still manages to save $200 a month!
Saving $200 a month is basically nothing, especially in NYC. It would take multiple years just to save a few months worth of rent.
Training for a job that pays below what you need to live comfortably is a choice. You may feel passionate enough about that job that you are willing to accept the consequences of a low salary. If you are not, then you should not train to do that job.
I do sympathize, as it's essentially impossible for a 16- or 17-year-old to fully understand the lifetime ramifications of the profession they're about to choose.
But if people stopped making dangerous financial compromises to take jobs they are passionate about, then those jobs will either have to get funded more such that the salaries go up, or yes, they'll cease to exist.
I think social work is a job that's extremely valuable to society, so I would hope that, in the face of a shortage (due to people not wanting to take the job because of low pay), legislatures and whatnot would vote to fund it more. But that's up to communities to decide.
> Saving $200 a month is basically nothing, especially in NYC.
The woman who saves $200/mo (the article actually says $200-$300/mo, so it's a bit better, even) lives in Bensenville, Illinois.
They provide essential services, you're focusing too much on the choice to do something that pays a lot vs choice to do something you're passionate about
How about the choice to do something that simply needs to be done?
If there are people who will todo your job for the amount of money you find unacceptable, you will have a hard time bargaining for more money.
We, the people who pay for social worker through taxes, must be willing to pay them more. AND the social workers must be willing to walk away if their own needs aren’t being met.
If a "passion" is common enough, it will get systematically exploited by employers.
My problem with this is that there are a lot of jobs in the US that are important (physical therapists, speech language pathologists, some nursing positions, pharmacy techs, educators) that are getting to be not worth paying for the training. You don't make enough to money to pay it back.
And I want people to choose to do those jobs. :)
Also, I just want to add: I'm not engaging you in a debate about whether or not social workers "should" be paid more. I don't run the world.
Reduce expenses to live within your means, or figure out how to earn more money. The plight of... every person on earth
Which is cool until the point that rents take up 100% of your income and then you're screwed.
Let's imagine a world where almost everyone makes $7 an hour. You would expect pricing in the world to reflect that and housing to fit in that budget.
But now in that world you create a small percentage of people that can print as much money as they want. These people that print as much money also have a terrible problem as they are completely greedy and always want more. You'd expect the first outcome of this situation to be asset inflation. The behavior of the greedy would be to buy up as many 'real' assets with their fake money as quickly as possible. Eventually the behaviors of the people earning $7 simply don't matter. The greedy will extract as much wealth as possible and drive up costs beyond the point of survival until a significant portion of the population is tossing the other half of the population in to guillotines.
It is important to keep income inequality under control if you want a stable society (that's not a police state).
What they ignore is how long people lived at home for, how many people jumped immediately into marriage. This whole business of everyone having their own place is not sustainable, despite what we see in TV.
This means "stop having social workers".
You can only reduce expenses so far, and the easiest way to earn more money is to get a new job.
Basically, if social workers collectively refused to work for the current pay, either social work would be eliminated (unlikely), or pay would rise - either through government subsidies, or at the expense of profit margins.
But I think your point stands even aside from any regulatory specifics. Asking social workers to strike for better wages is essentially asking some of the most vulnerable in our society (e.g. kids in the foster system) to bear the brunt of our collective underinvestment in meeting their needs. I think that’s less acceptable of an impact compared to stressing out some BigCorp’s bottom line in the case of Amazon or Starbucks and similar
I've decided that many Americans believe that the definition of "freedom" is "freedom from having to even think about people who are outside of my family/social group". The homeless person on the street isn't a tragedy because human beings shouldn't have to sleep on the street, it's a tragedy because I have to see it and think about it.
[EDIT] Assuming you don't have more than ~2 such urgent expenses per year, that is. And none worse than that.
They are knowingly trading the good feeling they get when helping people for the cash they could get by being a cold capitalist. You can make the argument social workers should be paid more but probably not the argument the person is employed in the highest saving ability profession they could reasonably hope to work in.
Same for entrepreneurs. What are the genius billionaires going to do if nobody wants to work for them and everybody wants to be an entrepreneur? We need to reward all kinds of useful jobs and not have all reward go to the sociopaths at the top.
As it stands individuals see the good feels as part of their wages. Otherwise they would do something higher paying. IF nobody does the job because the good feels does nothing for them then they'll have to start paying as much as the cold capitalist job.
Also, I think you're too hung up on "social work = good feels." Do fast food workers get good feels from their work?
And as an aside, very few people deliberately take a reduced fast food wage in the goal of helping others whereas a large number of our skilled and caring social workers knowingly entered social work knowing their college education could be used for higher paying endeavors.
And I would be very curious to hear some suggestions for jobs a social worker could get without any additional training that pay better than social work. NYC requires posting salaries in job openings, so with a suggested job alternative, we can easily find if there are many job openings for the new line of work and whether or not the job would pay materially better than social work.
Which leads me to my response:
>What are all the capitalists going to do if everybody wants to go for the big bucks and not do things like social work, nursing and many other jobs?
Well if what rcme says is true, they're being paid the top dollar of anybody with their skills... that kind of answers the question. They're at the biggest buck profession they can get (remember rcme thesis is they don't have the resources to retrain or whatever) therefore the profession will still exist.
Who would be in charge of identifying who gets that money and managing the systems that distribute that money and would they get paid more than the social workers that got fired?
My prediction is especially neglect but also abuse are often symptoms of poverty and insufficient economic security. I do not believe economically starving the parents is somehow going to help the neglect of overburdened parents, but I can respect some possible hints that may be drawn from your question. My belief is the number of kids saved through such a measure would outdo the number the social workers would have saved. But that is just a theory.
Yes, all these people could probably make different choices to save a bit more money, but a) min-maxing life like that sucks, and b) most people constantly giving this advice didn't do that themselves. Is there a single person in America who:
1. At 17 years old ignored every single adult in their life and wisely chose to go to trade school instead of college because their 30-year projections of their own life showed loans might be too much of a burden
2. Stifled all personal ambition and passion and chose a career with the most objective earning potential
3. Cut off all friendships and moved to the lowest cost-of-living area where they could still find a job
4. Lived like an ascetic hermit until they had a large enough emergency fund in the bank
The answer is no, this person does not exist, if they did they would be miserable, and nobody wants to live in a world where this lifestyle is necessary for an average person to feel financially comfortable.
Edit: Also, when you describe $40,000 as a "low income", are you aware that the median income for a 20-24 year old is less than that?
...as this author has almost systematically done. It's not really a "lecture" when I'm just re-stating the facts in the story, is it?
If that was indeed what you were doing, no. But that was not what you were doing.
Wow, this is unrealistically antagonistic. I think you need some qualifiers somewhere in that assertion. Anybody who simply "wants to read an article with this title"? Every example to the contrary?
Maybe stop assuming absolutism where most people would never intend it? Interpret posts with the most charitable interpretation possible given what's written? (Y'know, like the HN guidelines require of us in order to keep conversations civil?)
How do you figure? The person you're replying to is pointing out that the majority of people profiled for the article seem to be doing just fine: they are saving at a decent (some at a more-than-decent) rate, and are living fairly comfortably. Lecturing them about something they're already doing seems pointless.
Only two of the people profiled in the article seem to actually be struggling, and might get lectures they're tired of. If the others are getting these lectures, then whoever is doing the lecturing clearly doesn't know how well they're actually doing!
You are replying to something that the grandparent did not actually write.
> when you describe $40,000 as a "low income", are you aware that the median income for a 20-24 year old is less than that?
Are you aware that something can be low even when there are other things that are even lower? Also I don't see where the parent mentioned "$40,000" at all, so maybe you clicked the reply button on the wrong post?
Anyone who manages to save 24k a year on a 90k salary in NYC -- where the median studio apartment will set you back more than 2k a month and coffee and lunch out can easily exceed $20 -- is doing a good job.
London has similar conditions to that and far fewer people are earning $90k+.
Not only that, but she manages to maintain an emergency fund of $10k. I... think she's doing just fine?
$90k a year is definitely not "well below average in NYC" - median household income is only $70k a year! (1)
1 - https://www.census.gov/quickfacts/fact/table/newyorkcitynewy...
> The third woman actually makes a lot (they won't say how much) and has "achieved financial stability" (thus undermining the thesis of the article), but sends "the majority" of her paychecks to her family.
I’m simultaneously thrilled that I could pay 13k in medical bills in a recent family medical crisis, and very well aware that every time I’m able to do that kind of thing I have exactly the same savings of basically fuckall as I’ve always had. I’m similarly thrilled that I was able to pay off all of my outstanding debt after a few months not really recovering from burnout, again with approximately dick in savings. Neither of these achievements I feel bad about, but neither of them give me any kind of security in the sense people mean by “savings”.
Granted I’m 40, so I’m just resigned to probably making do until I don’t. So at least I don’t have 20 more years of that understanding to make do with people telling me I’m better off than I am.
If I had a dollar for every person telling me 'I should have traveled the world more when I was young', that would be quite a sum. Backpacking can be done extremely cheaply in places like India or Nepal, in 2010 I spent roughly 500$/month all costs included there. Was it fancy snobbish type of trip? Heck no, riding on top of buses or cramped inside in fetal position for 12 hours straight next to chickens, eating in local dhabas, and still those were the best moments of my life, 3 months felt like 2-3 decades there. As a bonus such an experience will make you a better person overall, certainly it worked for me.
You simply can't get this kind of exposure to the real world in any other way, expensive organized trips certainly don't do same magic.
Perhaps unsurprisingly—and, maybe even explaining most of the effect—home ownership rates at-same-age, by generation, look pretty similar. More 25-year-old Boomers owned their home, than Gen Xers, than Millennials, than Zers, and there's no later-in-life sharp uptick for those generations that makes up the gap. Worse with each generation.
So yeah, any advice or claim from these people rings stupidly hollow, especially since they regularly seem to have no fucking clue what these young people are experiencing, because in their time, the minimum wage was enough to buy a medium size house, a small car, and have a family.
Statements like this are weird to me, because "cooling inflation" doesn't mean "prices are dropping", and suggests that the author doesn't really understand basic economic concepts. When inflation raises the price of something, that's it: that's the new price. Absent other innovations to make it cheaper (more efficient production or logistics, etc.), the price will not go back down. The hope, of course, is that once inflation is under control, wages will rise to counteract its effects.
> Theresa Fairless [...] said paying off student loans was her priority. Ms. Fairless graduated from college in 2018 with about $25,900 in government loans and $50,000 in personal loans.
Now I don't know the details of her loans, but this was a mistake I made in my 20s: if your interest rate is low, your priority should be saving and investing, not paying off the loans. Obviously you still need to make the minimum payments.
Granted, investing has not been great over the past year, so it probably has been a good idea to pay down debt more aggressively than in prior years.
I had a government college loan at 3.5% that I absolutely should not have paid off early. I had a private loan as well that was variable, and I think when I paid it off it was a little over 4%. Still questionable; maybe should have put the extra cash toward investments rather than the loan. But at the time I didn't really know what I was doing, and was also worried about the variable rate rising too much.
(Her loan amounts are also in line with what I had... well, I guess technically lower than mine, considering inflation over the past 20 years.)
A couple paragraphs down it talks about how she is saving and investing, has a $10k emergency fund, and is still able to give her mom some money to help her out. So... it seems like she's doing just fine? Seems better off than a ton of people, anyway.
Why? You knew of a better opportunity to make a risk-free 3.5% (less any tax deduction)?
Also the tax deduction you point out is nullified by paying off the loan. The deduction is on student loan interest. So now that is lost every year. If someone qualifies for that deduction and inflation is normal/high it is pretty hard for 3.5% to be worth paying off early.
Yes. Nullified. You don't get the deduction if you pay off the loan. That probably doesn't amount to much in the income bracket under consideration.
“Risk free” is too high a bar for any investment, compare the expected outcome instead.
Sure, if you have exactly zero risk tolerance, pay off a low interest rate loan. But based on history, you will almost certainly lose over the long term of a decade or more.
Also, your article says:
"Adjusted for inflation, the historical average annual return is only around 8.5%.
There is an additional problem posed by the question of whether that inflation-adjusted average is accurate since the adjustment is made using the inflation figures from the Consumer Price Index (CPI), the index which some analysts believe vastly understates the true inflation rate."
So maybe the stock index average to use is more like 2x the loan interest.
I see where you're going with your statement but I believe the wage-price spiral being a major cause of _this_ inflation is not a fact. :)
The alternative is possible, that housing and food costs would remain steady or even decline while other prices increased, bringing the ratios back to more historic levels. But, this doesn't seem to be happening.
It's an intentionally vague description that lets the NYTs writer off the hook for not having to be more specific about something which is more complicated and doesn't understand that well.
"Build an emergency fund" is basically impossible for a lot of people. I remember hearing that advice. The problem was that food, housing, my car, and related necessary expenses ate up most of my paycheck. Getting rid of cable would have saved a tiny bit of money, made life miserable for me inside my small apartment, and contributed approximately nothing to an emergency fund equal to even one month of income. I knew it would be nice to have more money in savings before anyone told me.
> I feel like the older generation is constantly pushing you to do stuff like they did when they were in their 20s, but it’s not even comparable to when they were in their 20s
Anyone that says this does not understand what it was like for the older generation. Most of the time if someone is pushing financial advice, they're either trying to sell you something, or they're trying to help you avoid the problems they faced. It was never easy.
I'd even say that it was harder since nowadays there are various social programs, not to mention "helicopter money". Until around after WW2 if you didn't work, you got nothing.
I work at FAANG and just generally see so much lifestyle inflation from coworkers, even at high incomes. Taking Ubers everywhere instead of the subway or bikes, $20 cocktails, fancy restaurants that aren’t really that much better, those high price fitness classes… I interact with a lot of people at high levels who have been there for a while, and often wonder why they aren’t retired yet.
The salaries are so much, especially with stock, perks, bonusses, raises, etc. that they still probably are doing well. The biggest cost is having kids, cause then you have wife, healthcare, college, etc. (assuming single income household).
I live so frugally I have an entire years worth of cash in my bank, despite only making $65k (underpaid even for an area that has low SWE pay and a company that openly targets low SWE pay) and spending over $1600 a month in rent and utilities. But I still can't afford a house anywhere within 100 miles. I can't have a hobby that requires any extra space. Rent has gone up by $15000 a year, everywhere.
Why the hell should we get advice from the generation that lived through the easist access to well paying jobs and investments pretty much in history? They literally have no idea what this is like. They lived through a time where you could walk into a place just out of highschool and get a job that you could almost afford a brand new house with. They lived through a time where employers would train you, pay for you to learn new things, and expect to move you up through the ranks so you could be more useful and make more money. They lived through a time where fretting over a hundred dollars difference in a living expense was a common thing. They lived through all this and STILL didn't plan for retirement or save money for emergencies.
So yeah, they have no good advice to offer us, because they genuinely don't even understand how hard it is to spend literally half your income on a roof over your head.
I think that supports the article. That someone with two-months of income saved up would be in the top 10% of her age group isn't a great sign about the state of her age group.
I was born in 1981, my family was comfortably middle class. I left college in the early 00s with a decent chunk of debt, and couldn't really start saving until I was nearly 30.
Yes, I get that many college graduates today are saddled with more debt than I had, and inflation and rising housing costs aren't helping, but is it really that different? It seems like the severity is worse, but the tune is the same.
I always interpreted the "always save some" mantra (which was a mantra as long as I can remember) as a way to form habits, not to really accumulate any large amounts of retirement funds.
It's better than some of my peers, worse than people in the more wealthy countries, but still feels both like a necessity and something that's also not enough at the same time. In the last year, I've seen my investments (bank managed funds) go from being +10'000 Euros over the value at which I got in, to being in the red, to slowly recovering now. The inflation isn't all that good, either.
I'm taking a short break from working altogether to upskill myself and work on some personal projects, so it's nice to have savings for cases like these (as well as things like unforseen medical expenses, though most are manageable here), but something tells me that I'll need to keep living a somewhat spartan lifestyle, getting some limited peace of mind in exchange for that, saving similarly wherever I work next.
To be honest, I feel bad for people in high cost of living areas, especially those who have cars and families to take care of, as well as debt - the economy should probably be in a better spot, and certain groups of services should be more affordable than they are now.
28 y/o. Worked three jobs prior to COVID. All three jobs evaporated in the same week. Moved from Midwest to California seeking opportunity. Now I’m serving a low-tier IT role making 55K in SoCal and it’s… really depressing honestly. I feel like I’m stuck here.
>So just don't live there
There's only so far away from the jobs you can go.
My point is there are jobs in low cost of living areas, and even when they look like a low paying job it might be more then enough to live in that area.
To be clear, much of the older generation didn't do this in their early 20. It's been a building concern for many decades.
And they've been lectured about it forever, same as 20-somethings are today. It's not clear what "older generation" here here, but Millennials and Gen-X got stuff like SNL's 2006: "Don’t Buy Stuff You Cannot Afford" https://www.youtube.com/watch?v=R3ZJKN_5M44
This isn't "Gen Z is poor; Boomers/Gen X/Millennials were rich". This is "I'm poor, and know some older people who aren't". There's no shortage of people in their twenties making well into six figures.
> Ms. German-Tanner said 20-somethings were often encouraged to take financial steps like build emergency funds, save for retirement and pay off debt.
Well...yeah. It's good advice. It might be hard, but it's been hard for a sizeable chunk of the population for many, many decades. That's why there's constant push for it—without this emphasis, people just borrow and spend. True in the 70s, true in the 90s, and true today.
>"He said that he owed his father for providing him with much of his personal finance knowledge and that friends from families who didn’t talk about money did not have as much financial literacy."
But why focus on the gender. What about skin colour? Or maybe political preference? Do they have to be weighted to the average population too? This is of course silly - that's an newspaper article, not a scientific paper.
Edit: my math was off, 12% instead of 21% (brain fog, it's 3am here). My point still stands.
[1] https://en.wikipedia.org/wiki/Social_Security_Trust_Fund [2] https://www.bbc.co.uk/news/business-38957903