This is a follow up to my previous post Is This Still the Land of Opportunity? From the comments, the general consensus was that you can come from humble circumstances and do great things. All you need is to work hard, sacrifice, and maybe a little bit of luck. It shouldn’t matter where you came from but where you are going.
One way that many determine whether they’ve improved their lot in life is by comparing themselves to where their parents were. I think all parents want their children to be better off than they were. How would I answer this question? Absolutely, yes. My father immigrated here with a student visa and put himself through college by working at a restaurant. Unfortunately, times were different in the late 60’s and 70’s, and he also did not have a network of people guiding him in his career so he was not able to apply his degree to his career. He graduated with a chemistry degree from Seattle Pacific College (now Seattle Pacific University). He worked as a waiter, a real estate agent, and then a shopkeeper before retiring. As with most immigrant experiences, the fact that I was born here has made it much easier for me to improve my lot in life. But sometimes I wonder, if my children and later generations can continue that trend.
Many who have been here for generations have had different experiences. Adam who blogs at Stop Worrying About Money made a pretty insightful comment on my recent post Is This Still the Land of Opportunity? Here is what he said:
I think it’s definitely possible to move up the economic ladder in America. Hard, smart work will always provide positive results.
I also think you have to be realistic. The economic world is so incredibly different now than it was when my father started his career 40 years ago. Many of the entry-level jobs that would have been available to a 20-something back then have now been outsourced to other countries or replaced with robotics. I have a college degree, my father doesn’t — but so does almost every other 20-something looking for jobs right now, which puts me (and them) in a position of having thousands of dollars of debt right out of the gate, but faced with tons of similarly-credentialed competitors for a limited pool of jobs. At the same time, those jobs are slowly dismantling the benefits packages that my parents are accustomed to — fewer of my potential employers offer retirement plans or health benefits.
Despite all that, I can still move upwards. I just have to do it in a different way, by pursuing nontraditional income opportunities like online work, reprioritizing my goals (I’m 28 and I likely won’t buy a house for several more years — my parents had already purchased their first home by the time they were 22.), and staying aware of the fact that my economy is not my parents’ economy.
Some of the factors which have made it harder to be financially better off than our parents:
Jobs
Gone are the days where one works for the same employer for their entire life and receive a gold watch when they retire. Job stability is not what it used to be. Also, many of the manufacturing jobs that used to be here have now gone to other countries or made unnecessary due to technology as Adam mentioned. In addition, most jobs no longer offer the great benefits packages or pensions they once did, and are not as stable.
High Cost of Education
A high school degree is no longer enough to get jobs, even jobs which traditionally did not require anything more than a high school degree. A college degree was often not necessary for many career tracks, and for those that required a degree, it was not as problematic because tuition was much more affordable. Back when my father was attending Seattle Pacific College, it cost $400 per quarter. Yes, $400! That would barely cover textbook costs nowadays. For the 2013/2014 semester, Seattle Pacific University now charges $11,148 per quarter. That is a huge increase. During that time, the colleges in the City University of New York system were free. Yes, college was free.
Expensive Housing Costs
Buying a house is considered the American Dream. To many people, owning a house is a sign that they’ve made it. Back in our parent’s generation, housing was much more affordable. My father and grandfather bought a house together while they both worked as waiters in the NYC area. It would be almost impossible for someone with their income to afford to buy a house in this area now, with the high prices.
Even though I said that I am financially better off than my parents, I did have to take out a significant amount of student loans, and I am unable to purchase a house in this city, unlike my parents. We have to keep up with the changing times and try to find solutions to the obstacles of our generation.
Jobs aren’t as stable? Learn new skills. Find a side hustle. Be flexible in re-locating. And some may not agree, but maybe major in a field which is in demand. The internet has opened up a lot of opportunities to earn money as well as to gain knowledge which may lead to money making opportunities. Your job doesn’t offer a pension? Make your own. Higher education is expensive? Consider going to a community college for a few years before transferring to a bigger university. Look for scholarships and apply for financial aid. Work part-time while going to school. While this may be an oversimplification of the solutions available to the obstacles in this generation, it is much more productive to seek out possible solutions rather than to just complaint about the problems.
Are you financially better off than your parents? What do you think are the reasons why or why not?
I think this is a really interesting question. I am actually financially better off than my parents some years, other years I’m not – my dad owns his own carpentry business. But at the end of the day, I’m paying for a lot less than them too. I don’t have a mortgage and don’t see one happening in the next decade (which puts me right up on 40 before I buy a house, so that 30 year mortgage is gonna be awesome). They’re also still putting my little brother through school. Honestly, January was the first time I took on regular bills like rent and utilities since I took a really non-traditional career path prior to that. So I agree that with a lot of flexibility and thinking outside the box, you can succeed in almost whatever you intended to.
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Yea, I haven’t bought a house yet. It was much more affordable back in the day.
I definitely do not feel better off than my parents, and I work with people in their 20s and 30s on their finances, and from what I can tell, I don’t think that they are better off either. 60% of students are graduating with student loan debt now, and the job market is not only anemic, but there has been minimal wage growth in the last 10 years. It is definitely tougher to get ahead now.
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Yes, student loans are one of the biggest issues with this generation. The burden of having a large amount of debt right when you start your career is tough. Tuition was much more affordable and the amount of debt is unheard of back then…not even for a mortgage.
I think so, but not by too much. My parents immigrated to Canada when they were quite young, early 20s and met here. They were lucky enough to land steady jobs right away and with great pension plans. They are now retired, living off their pensions and enjoying their life.
I have a steady job, also with a government pension. They bought a house in their mid 30s, I bought mine just before I was 30. I think I may have been better off in terms of childhood and opportunity instead because I was born and grew up here.
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Me too, I have a steady job with a pension, something my parents never had. I haven’t bought a house yet, and I’m not sure when we will…and when we do, it’ll actually be a co-op. Houses are too expensive in the NYC area. I definitely had much more opportunities because I was born here.
Am I better off than parents were at my age? Probably. But at this point, my father was on a career track that would get him to a more “successful” place than I imagine I will ever get to. Not because he became a CEO of a company or anything like that – he works in education, but because I have chosen a different path – one where I don’t care about moving up the traditional career ladder. Part of this is necessity – I doubt I would ever be able to do what my father did career-wise, even if I wanted to. But part of it is choice. Financial Independence appeals to me.
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It would be interesting to hear more about the different path that you are own and your journey to financial independence.
It’s definitely harder to get ahead today, but it is possible. With scholarships, a part time job, and going to the university I did, I was able to graduate debt free. It was a difficult accomplishment, but one I am proud of. It’s made a huge difference in my financial life. If you can graduate sans debt, do it.
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Very good for you being able to graduate debt free…I think it is a problem when so many people are saddled with a large amount of student loan debt. I went to a public university for undergrad and I worked full time when going to grad school but still accumulated a lot of debt.
I’m way better off than my parents and so is my wife. Your post has inspired a future post about living the American Dream. The Dream is still there, it’s just different today. In most parts of the country (except NYC, SF, Hawaii) housing is at an all time low in regards to a % of your income, so is food and vehicles. Our lives are much better today then even 10 years ago.
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I’m glad I can inspire you Charles! I didn’t realize that housing was at an all time low in most parts of the country…I guess I’ve lived in NYC too long! Vehicles are definitely much more reliable, safer and affordable…people just tend to buy more car than they can truly afford.
My mom once told me that she earned 16 % in her savings account when her and my dad first got married. If that were still the case, we would be RICH! A lot of things have changed since then, and I do think that it’s now harder to get ahead. However, some things have changed for the better. The work I do, for instance, didn’t really exist back in those days. So in that respect, there is more opportunity.
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Yea 16% interest rates sound good for a savings account…but what would the mortgage rate be?! I definitely agree that the internet has opened up a lot of opportunities for people.
My dad passed away a few years away, but he was always good with money. My mom on the other hand – I don’t think it gets much worse than her. She is really bad with money and I am doing much better than her.
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It’s good that you have the financial traits of your dad.
I agree most parents want AND expect their kids will do better than they did. That is also part of the American dream. I am an optimist so I do believe it is still possible for kids to do better than their parents financially but I am also a realist. The world is very different and previously it was very easy for kids to get ahead, mostly due to a higher education. Now days, as Adam pointed out, the playing field is more even and those foot-in-the-door jobs are more scarce. The other reality is that kids are leaving home with little understanding of money so they don’t start their adult life making good financial decisions, which further minimizes their potential. We have also been at an upward trajectory for many, many years. At some point a certain leveling off or even a decrease has to be expected. I still believe that hard work, creativity and financial knowledge will still allow you to create the life you want, if even you don’t necessarily earn more than your parents did.
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You’re absolutely right that the world is very different and it is constantly changing. The job market is very different and good point about the “foot-in-the-door jobs.” It’s a catch-22, how do you get a job that requires experience when you can’t get your foot in the door to get the experience.
“Many of the entry-level jobs that would have been available to a 20-something back then have now been outsourced to other countries or replaced with robotics.” Ironically I wrote about this very topic today. I think it’s interesting you mention housing. Housing is such an odd topic. On the one hand, almost everyone cheers on the market when housing prices are going higher. On the other hand, if houses get more expensive it becomes more difficult for people to purchase them. Yes it’s an investment, but at the same time it is very much a consumer good.
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Yes, I read your post about outsourcing…not ironic…great minds think a like! haha. I assumed housing is much more expensive than in previous generations but Charles said that it is not the case, except for certain areas of the country. I do think some people are buying bigger places than in previous generations but here in NYC…prices for a house is pretty much out of reach for most.
Great question! Today’s economic realities are much different from previous generations. A college education is becoming an increasingly important tool to have in order to earn a living. Consequently, college costs have skyrocketed over the past few decades and show no signs of slowing down either. Students are taking on large loads of debt and are unable to afford a house or other major purchases. This only delays and stagnates overall economic growth.
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Yes, college education is almost a must, even more jobs that traditionally didn’t require it. I don’t think the skyrocketing tuition costs are sustainable…much like the housing bubble, I think the student loan bubble has got to burst at some point too. And very good point, the amount of student loan debt is really going to negatively impact economic growth.
Great post! We’re much better off financially than my parents were, who immigrated to Canada from Italy, without even speaking the language. So it was hard for them to even find work. But they did and they made plenty of sacrifices and only paid for things with the money they had. While they did end up settling in jobs that employed them for 10+ years, they also had to jump from job to job, many times at the beginning. I’ve written before on a similar topic. Traditional jobs are dying, housing costs are through the roof, education costs are rising (though I don’t think for much longer). So there’s no doubt our kids are growing up in a much tougher environment than ours. But there are still opportunities and I’m hopefully, just as each generation has its challenges, each learns to adapt.
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Thanks Anthony. Very interesting to hear your parents’ experience…I think it is an experience shared by many immigrants. I’ll have to search your archives to read about it. I’m with you on the education costs…they just can’t continue to rise at that pace. I didn’t know that it was as bad in Canada.
Fantastic question, Andrew. Inter-generational questions like this can yield some great insights. I think, without a doubt, I’m better off financially than my parents were at my age. My wife and I are probably better off than they are now. But we PF bloggers are kind of outliers, so I wonder if my own comparison is representative, you know?
While the cost of housing has gone up, I wonder if it’s gone up in real dollars. I seem to remember reading somewhere that people are spending a lower percentage of their funds on housing, food, and durable goods now than, say, in the 1950s. NYC may be a significant outlier, of course.
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Well, PF bloggers may be outliers, but my father is cut from the same cloth. He lived below his means, was very frugal (much more than me even though I think I’m pretty frugal), and he was into saving and investing as well. You’re right that NYC may be a significant outlier.
My wife and I are doing very well, but we are not better off than my parents. My family lived in a suburb of San Jose that my wife and I cannot afford to live in. Back in the day, my father worked and my mother was a stay-at-home mom. She definitely worked, raising four boys, but it was non-paying work. My father was a civil engineer. My wife and I are both mechanical engineers. I had no debt out of college due to using the GI Bill. My wife had something like $12k of college debt, but we paid that off shortly after getting married. We are currently paid more than civil engineers, yet our combined salaries still cannot buy a home in the neighborhood where I grew up. We are not really wanting, and have saved enough to put our son through college with no debt. We also expect to retire comfortably in 9 years, but we are not financially better off than my parents. I think much of it is due to the fact that things like college costs, health care costs, and housing costs have all risen at a much faster rate than the base inflation rate.
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Wow, a whole family of engineers. I really that it is a very good major…one that makes it much easier to find a good paying job. It seemed a lot easier in the previous generation to have a single income family with one parent staying home with the kids. (And wow 4 boys!) It’s crazy that even with your combined salaries, you cannot buy a home in the neighborhood you grew up in. I feel the same one…but as others have said, I guess housing prices are very local. Some areas the prices have risen astronomically. I agree that college costs, health care costs and housing costs are the big factors in making it more difficult to be financially better off.
Comparing my husband and I to my parents when they were my age: We were/are both moving around the country for graduate school – in their case, one was getting an MS whereas both of us are getting PhDs. They didn’t start their real career jobs or buy a house until about age 30, which will be the same for us or a bit later on the house. We probably make about the same money at the moment (adjusted) and it’s not yet clear who will be the higher earners eventually – my husband and I will be more educated, but that doesn’t necessarily translate to higher wages. We’re not in debt and neither were my parents at that time. My parents bought a house in a HCOLA and that is our plan as well.
I’d say that the lessening of opportunities and wages over the past few decades has been offset by the “leg up” my parents were able to give me over what they were given by their parents. So we’re about the same.
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Interesting, it seems that you’re on a similar path as your parents. My parents bought a house in a HCOLA and that is my dream, but I don’t know how feasible it is.
In some ways, yes. My parents are still saddled with some debt that they acquired later on in life. While they have a house that’s paid off, I’m very glad the only debt I have is from my student loans. Neither of my parents had a degree; my mom worked in admin jobs her entire life. I hope I’m not on that path. My dad was a network engineer though, which did bring in decent money, but he was laid off a few years ago.
In the future, I do see myself better off than they were because I’ve learned from the financial mistakes they made. I hate to say it like that, but I hope to never be in debt again unless it’s for a mortgage. Additionally, my parents never really had an emergency fund, and they only have a little bit invested, so I should have much more saved for retirement by the time I’m their age.
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That’s good that you’ve learned from your parents’ financial mistakes, so you are already ahead of the curve. Plus, you guys are planning on moving to a lower cost of living area, so hopefully that will a positive financially.
I’m not quite sure what my parents finances were honestly, but my dad was a dentist, lived in Michigan (versus LA), always owned a home, and was good with investments, so I really don’t think I’m anywhere near as well off as he was financially. But I also think I have perks and experiences that he never had, so better off in general? Maybe not.
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It does make it tougher to be better off financially when your parents set the bar high. It is true that I’ve had many more experiences that my parents never had…though they probably would say the same!
No way Jose!
My parents don;t have to pay ff debt and thy are out of the red.
They have also been out of the red for a great amount of time. I, on the other hand, am not even close to them in income.
So, the answer is a big fat NO!
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What kind of debt? Student loan debt?
Really interesting point. When my parents were my age (29), they had me and lived in LA. It sounds like they were pretty broke for a while, but now my mom is really successful and makes a ton of money. I on the other hand, have tons of student loan debt (81k total, currently at 44k) that I am paying back. I will never own a house or have kids, and I don’t want to. Even if I did, I can’t see them as financially viable options for me. Sometimes I feel so behind, or like our generation was robbed of so many luxuries. I also went without health insurance for a long time and benefits and incomes that were taken for granted before, are now non-existent.
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I feel your pain, I have a lot of student loan debt ($90k, currently around $50k I think. You’re still only 29…I wouldn’t say you won’t ever own a house or have kids. Well if you don’t want to, that’s totally fine, but I wouldn’t write it off as a financial impossibility. I know what you mean about feeling behind…the heavy student loan debt does that to you. Good luck…you’re doing great with the debt payoff!
My parents both earn a higher salary than I do, however, I think I will be better of financially when I reach their age. I’ve saved more and definitely plan to retire earlier, but it’s a lot harder for me. They both have pensions and social security.
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Hey you never know…social security may still be there for us too! I’d definitely like to retire early as well. My parents didn’t necessarily retire on their own…it was more of a forced retirement. And at a certain age, it is very difficult to find another job.
In my case, it’s pretty obvious: I am financially better off than my parents, but it’s not that difficult to be. They grew up and spent about 40 years in communist Romania, where there weren’t many (if any) opportunities to do better than your next door neighbor. And I do believe that this is how it should be: every child should do better than their parents.
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Very interesting story…I still remember reading your post about it. And I can definitely see that there is much more opportunity now in Romania compared to in the past generation.
A house is still affordable. The difference between people buying houses now and our parents is that our parents didn’t demand walk in closets, stainless steel appliances, spa bathrooms, vaulted ceilings etc. Our parents saved up 20% down payment and bought a house they could afford. Then as they saved cash, they fixed up one room at a time. They didn’t feel like they had to have a custom style home. After the housing meltdown in 08, house prices dropped tremendously. And the interest rates have been the lowest they’ve been in years. However, you also add to the mix that young people today too often have taken out student loans to get degrees in areas where there are no jobs…..(gender studies anyone?) And they want to live a lifestyle that our parents never envisioned….going out to bars and restaurants every night, expensive trips, a semester or year in Europe during school. So being better off than parents is relative. Our parents were willing to change their lifestyle to accomplish their goal. Too many young people today don’t seem to be willing to sacrifice anything toward that goal. So you can be living a richer lifestyle but not have the dollars to back it up. Our parents chose the other direction.
I totally agree, Kathy!!
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Yes, I think the real estate market is very local. I live in NYC and the housing prices are astronomical and unaffordable for most. Many others who commented mentioned that this is not necessarily true in other areas of the country. But I do agree with your point that people also are buying bigger and nicer houses. Too much HGTV…everyone wants granite countertops, a personal bathroom with spa, and fabulous amenities they see on TV. I also agree that many people get degrees in areas where there is little demand and are saddled with debt…but I think that the college costs have risen astronomically compared to the past. I think the student loan bubble will burst at some point much like the housing bubble. It does seem that our parents were less materialistic and lived less of a consumer lifestyle…didn’t have iPads, TVs in every room, 3 cars, etc, etc!
Another awesome post, Andrew. I agree with Adam in that things are different, but that doesn’t mean that they are worse. Side hustles and self-employment were only available to an elite few back in the day. If you wanted to publish a book, for instance, you needed to hit the streets and beg publishers, nowadays self-publishing is widely available, as is freelancing work in many, many fields. Only rich people could own a business back in the day, but now many people own small businesses. When your dad came here, he had to be creative in getting money for school, finding work, etc. I think the fact that the world has become, for many, so much of a world of instant gratification, that if we find we have to work for something or get inventive, we just say “It’s too hard” or “it’s not possible” or “Things are different these days”. I think the focus is wrong. Instead of looking at how things were, we’re not taking advantage of how things are today. Does that make sense? I can’t imagine it was easy, by any stretch of the imagination, for your dad to come to a new country, get his visa, attend college and find a job in a place he’d never been to before that spoke a different language and everything else. But he DID IT. He bucked up and dealt with the barriers and chose to make every attempt to break them down. WOW! He didn’t expect it to be easy or for things to be handed to him. No, traditional jobs aren’t the same today as they were for my dad, and this is why I’m teaching my kids right now at an early age to be creative and search their gifts and talents and use them to make their own way. We just can’t afford as a country to make the battle focused on what we can’t do and what we don’t have. If we’re going to succeed, we need to focus on what we CAN do and what we DO have. I think this attitude is mainly what’s changed in America over the last 100 years. We’re just too comfy, and many of us have forgotten the benefits of a hard days work and a little ingenuity.
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Thanks Laurie. Yea, the internet really has opened up a lot of opportunities for people to make money. There does seem like many in the younger generation lack a strong work ethic and often have a sense of entitlement. Of course that’s not true for all, and there are many who face obstacles that those in generations past did not face. Loved your comments about hard work…I feel inspired! =)
My mother moved here with six children as a widow at age 29. We were on public assistance until I was 18 years old (I’m the youngest of the six). My mom never wanted any of us to be on public assistance and she instilled in us to find our own way in life. At age 18 we all knew we had to find jobs and start paying our own bills as my mom had no way to continue supporting us. I’m happy to say that we broke the cycle. None of my siblings are on public assistance. Right now 5 of us own homes and 2 of us graduated college.
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Great that you broke the cycle…and much of that is probably thanks to your mom who taught you guys right. Pretty amazing mom…raising 6 kids by herself.
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I agree to what you’ve said about the factors that why our parents are more financially better than ours. I also experienced that that’s why I’am really convinced that this is true. Thanks for sharing your thoughts!
This is something I think about a lot. My kids are in their 20s and 30s. They have been able to do well, but it have been bumps in the road. They had some advantages. They are all engineers which is a career path that continues to be in demand somewhat in this economy. That’s not guranteed for the future because so much can be off-shored, including engineering. At least at this point they have been able to get a start on the job ladder. Their other advantage was that they had not college debt. That’s because we sacrificed to be able to put them through college. That’s not possible for many people. Our income was a middle class income and not upper middle class income. Our retirement savings is less because of it, but we knew that going in.
As difficult as it is for this generation, I fear more for those coming up after them. With continuing and even increasing automation, how will there be enough jobs? The jobs that are available often come with low paychecks. I’m all for entrepreneurship and small businesses, but a high per centage of these fail. This economic environment can be the crucible of much innovation, but in the meantime there is much stress and pain. As you say, it’s better to try something than to just complain though. You have to try something.
So often we hear “do what you love.” That’s fine if you can also make it into a job that will pay enough for you live decently. Unfortunately, that is not always the case. Tough times call for tough decisions. Studying for a job that is actually in demand and that pays enough sometimes is the wiser route. I think it’s just a hard fact of life that many will be forced to face. On a brighter note, cherishing our relationships with friends and family can make up for working at something that is not our first choice.
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Yes, engineering is a great major in my opinion…one that will make it a lot easier to find good paying jobs. It’s even better that they also didn’t have the burden of student loan debt. I hope you didn’t sacrifice too much of your retirement savings because you can always borrow to pay for college, but can’t do that for retirement. I agree with you that the future looks a little bleak for the future…but you never know what the future holds and we just have to adapt to the different economic environment. I also agree with what you said about “do what you love.” While I don’t want to advocate forcing people to do things that they hate…if it doesn’t pay the bills, then what are you going to do? Life is tough sometimes.
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I’ve continued thinking about this and wanted to comment further. I think we need to take into account the situation we will be in at our parents age. They have had maybe 50 or 60 years to reach the point they are at now while we have maybe had 1/3 that amount of time. How are they doing on their pensions or social security and savings and how will we likely be doing at the same age with our social security, 401k, pension etc. Will we be mortgage free as they probably are? If not, why. My parents put me through college with no student loan debt and I put my son through college plus grad school with no student loan debt. Expenses were certainly higher for us, but so was our salary. My mom talks about having many jobs where she didn’t even get $1 an hour. I made more than that with just my high school summer jobs. So I don’t think we can compare ourselves as each of us are now, but rather how we are compared to them at a similar age or stage in life. Thanks for letting me come back and comment again. A very thought provoking post.
Thanks for adding to your comment. Yea, it wasn’t clear, but I think that it is most accurate to compare similar age or stage in life.
“It shouldn’t matter where you came from but where you are going.”
It shouldn’t, but it does. To what degree, well that varies for people.
I think overall things are harder for us than my parents. It’s tricky to compare directly since we work in such different fields, my parents spent most of their lives overseas, and of course we now live in a different era and a very different world today. But the property market here is insane and I see no way for us to buy a house any time soon let alone have a paid off house in our 40s.
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Yes, I know that statement was a bit idealistic. You’re right, sometimes it does matter. Like you, the property market where I am is insane and buying a house is nearly impossible.
My parents are in pretty good shape because they don’t have any debt and have never lived beyond their means. My Dad has owned three different business by himself or as a partner, and has done very well with all of them, so I think being entrepreneurial certainly helped him. I think at their age, we’ll be in equal or hopefully better shape if we continue at our same rate of savings. Now my in-laws are a different story. We are eons ahead of them financially.
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I see where you get your entrepreneurial spirit!
Great question and solid post Andrew! We just had my Dad here to stay with us for about 10 days and my younger brothers were here for part of the time as well. Due to the age gap between my brothers and I we really had three different generations (I’m 15 & 16 years older than them) and we got around to talking about this topic.
It’s hard to say, but comparing myself to where my Dad was at my age I would say that we are to a certain extent. The big thing that has changed, well one of the things at least, is that it’s not really a straight line to improving yourself financially anymore. It took me leaving the corporate world and starting my own business, which was unheard of 25 years ago. It’ll be interesting to see where the next generations go from here and how they deal with things like debt and the job climate. That said, there are opportunities out there, I just think you have to be more creative and flexible to find them.
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Thanks John! You’re right that it’s not a “straight line” anymore. We live in a different world now. The traditional route to success may not be accessible anymore. Much like your life where you left the corporate world and started your own business. Creativity and flexibility are definitely qualities that will be needed to be successful in the future.
My mother was a big time exec at Unilever. She lived the American dream. Immigrant family came to NYC, father died, she and her sister got scholarships to Ivy League schools and became high power women. Of course she got laid off a few years before her big retirement package would’ve kicked in so that’s pretty shitty. Even so, I can’t imagine ever being as successful as my mom.
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Wow, your mom is one impressive lady. Well you’re still young, I wouldn’t say that you won’t be as successful. Plus, I think you can define success differently.
I’ve had this type of post drafted for a while but it’s so complicated to write about. To put it simply, and answer your question, I am much better off than my parents. I see this as a downside because all it took was a college degree for me to feel “accomplished” since that is more than they have. I am now out of the realm of support because we are on such different life paths. And now I don’t have anything motivating or directing me to progression.
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Yea, I can understand that the topic can be complicated to write, but I’d definitely like to read it. It’s a very fascinating topic…in my opinion. I’m not sure if my parents life path needs to be there to motivate or direct you to progression. My life path is very different, mainly because they immigrated here. But I look to my peers to see their life paths and sometimes use that as motivation.
What a GREAT conversation and provocative question! Do I think I am better of than my parents? Definitely, but I am closer in age to the parents of most of your followers–so my perspective is somewhere in the middle. I personally think the youth of today have amazing possibilities for making money. By the same token I think the people of my generation had the same thing–amazing opportunity. But I do agree that how you go about it today is very different. To me that is one of the biggest observations I have from my life and from reading a large portion of your commenters. Ultimately, I think people from every generation have the ability to succeed, but if a person wants excuses there are plenty of those going around too. It’s unlikely that anyone is going to hand it to you.
I was raised in a blue collar family with a father that never even graduated from high school. While college was quite cheap back in my day–there was no money–and certainly no family to encourage it–so it didn’t happen. The same for my husband. We found each other and then created our work (and have been self employed our entire lives.) No college, no pension and no high level careers. But we now live completely debt free and still work at jobs that we love, own our home free and clear, have free and clear investments and do pretty much what we want when we want to.
A lot of the people from my generation (likely people like many of your parents) when to college and worked at jobs they hated because people back then did that a lot. The more you have invested in a particular line of work the more it locks you in to a life and a lifestyle that you may or may not want. Without all that you have a lot less pressure to conform and can often see paths that others don’t even know exist. Learning what makes you individually happy and then working towards that is critical.
Whether you are better off than your parents depends completely on where you came from and what you believe is necessary to be happy. Just don’t confuse happiness with have a bunch of stuff.
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Yes we are still living in the land of opportunity but things have changed BIG TIME since my parents generation and in all the generations after me. People can and still get ahead but they can’t try to copy what their parents did (sure some of their advice counts but not all of it.)
I think the best perspective and one I have tried to live my entire life is to continually reinvent myself to fit the the circumstances of the age. When the real estate market collapsed my husband and I readjusted everything and went completely debt free. The day of excess is over–and the freedom that comes from that is amazing.
It doesn’t really matter if we are better off than our parents…what matters is whether we learning what we need to know right now to create a more free and satisfied life for ourselves. ~Kathy
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Oops…I didn’t mean to double post…I thought the first one was lost 🙂 Feel free to delete whichever one you want!
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No problem Kathy…actually the posts are different and are both informative and provide an interesting perspective so I didn’t delete either one! You’re right that it doesn’t matter too much whether we are financially better off as long as we are satisfied with our lives. And I loved what you said here: “Just don’t confuse happiness with have a bunch of stuff.” I think too many people think this way which is unfortunate as I think that is the type of mindset which has caused a lot of people to fall into a cycle of debt.
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What a great post! I would definitely say I’m better off than my parents (at least my mom who became a single mother in my teens) since I don’t have to juggle 2-3 jobs and live in a two-bedroom apartment with two teenagers. She did have a degree from our home country but it wasn’t as recognized as an equal here. I do want hopefully future kids to ‘do better’ than me, whether that’s an advanced degree or provide opportunities for them that I didn’t have, but I also want to balance it out with having self-initiative and to work hard/smart (which, not to toot my own horn, is probably why I was able to receive a higher ed. degree). It’s a tricky balance, but it’s one I hope to figure out!
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That’s exactly what I’d like to do to. I want my kids to do better and I’ll probably be better able to provide those opportunities to them, but I don’t want them to have any entitlement issues, and want them to have a strong work ethic.
I am not better off than my parents and I honestly don’t know if I will be. Both of them have been employed their entire lives by the same employers with lots of benefits and perks. Honestly I don’t even think of that as being an option for myself, and right now even though I’m in my late twenties, I’m struggling.
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Yes, many employers don’t offer the benefits and perks they did in the past. It’s a different economic environment for this generation.
Very interesting post. I’d say I’m probably better off (or will be) than my parents based on my salary alone. But there are a lot of other variables to consider. My mom and step dad live in rural Maine where housing is super cheap, so they probably had their house paid off long before we will. They also have a much more relaxed lifestyle which I’m sometimes envious off. Just proof that money isn’t everything. I might make more money but the cost of living in the metro NYC area is insane. I’ve never done the math, but they may have more disposable income at the end of the month despite the fact they make lower salaries than the bf and I.
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Yes, housing is much cheaper in areas outside of the NYC metro area. I definitely agree that money isn’t everything. Everybody seems to be in a rush here and it is incredibly expensive in NYC. Would you and your BF ever consider moving to a lower cost of living area?
I have a similar post coming up, apparently as a generation we are the first to be worse off than our parents.
I think I will be better off than my parents when I am 60, although in their 30s they were probably a bit better off because my dad had a great corporate job, so they bought a place in Paris which increased in value and in their 30s they had two kids, so I have savings but if you take off the cost of two kids I probably have less than they did.
Then they went through a nasty divorce and my mum had to go back to teaching after 15 years of hiatus and now she owns her 800sqft and a few investments but I think I have a bigger net worth than she does.
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I look forward to reading your post…it is definitely a very interesting topic. Divorce absolutely wrecks havoc in people’s financial lives…as well as other parts of their life.
My fear is that the financial situation of the current generation will continue to devolve. Adam touched on it but the dismantling of benefit packages and pension plans could mean that when the current generation reaches their golden years they could be in a much worse situation then their parents.
Countries are also moving out the retirement age from 65 to 67/68. By the time the current generation retires it might be a few years later still. They may have to work a half decade longer then their parents did for potentially fewer benefits.
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Good point. Most people in this generation don’t even count on Social Security to be there for them when they retire. We definitely have to make sure we save and invest on our own to make sure we can retire. We can’t rely on the company or the government to do it for us.
No, not at all. My condition is like a street beggar. I do not what what is going to happen with me. I will be a poor man soon.
Good article and compliments on the Blog and the civility of the crowd commenting.
This is a hard question. I believe that from a standard of life perspective people are better off in America. I come from a former Communist country, so I am definitely better off then my Parents in terms of what opportunities I have, but I will say that the definition of standard of life should not only rest upon monetary considerations, but a combination of opportunities available, and overall fulfillment in what one does. My father and mother have achieved things I can only dream in a system that was very tough on them. On the other hand the individual in America and elsewhere I guess is subject to an overspecialization of labor, where one is part only of a specific task, and I might add that not most of them require college. Even though I have a job with a lot of responsibility, I believe that I could have done it without college, certainly not what I finished with anyway, and no it wasn’t Art History but Mathematics. There is an over-extension of College and too many old fashioned ideals that I believe are keeping our generation from taking that leap forward towards fulfillment and getting out of this “demoralization trap” that many of the GenX,Y and Millennials are/will feel. Certain things in society have moved along, rights of different minorities, groups etc, but when it comes to things like leveraging technology to design your own education (Coursera has made a big jump on this) and not waste time on nonsense, or use the advanced robotics and tech available to rebuild our infrastructure and level of life, we are left instead with an overall misallocation of talents going for a job in Wall Street, and one of the most powerful cities in the world (used to be) Detroit, bankrupt. How is this possible ? How can all this wealth basically disappear into thin air and the young generation that is supposed to carry forward this nation is left with an abysmal amount of debt a crippling infrastructure, a very high cost of housing(which are also extremely old), and with a tax system that is not built to incentivize innovation and spending towards implementing new tech and infrastructure. To this point, it is very puzzling to a foreigner to see how housing in the US is used to drain the middle class financially, instead of providing incentives for people to say, remodel their home, basements, put solar panels, install advanced tech etc, everything has to be “assessed” to a higher value, and the cost of living whether one rents or owns goes always higher, while wages are not. This disconnect is the key towards understanding that forget about this generation being better off, but even our parents might not feel they are better off then their parents were.
It is a question of mentality, of traditional models that have become a burden on society. For example, just like a company can innovate, why don’t we have commissions to remove laws that are obsolete, or review regulations that aren’t necessary ? It is a question of space, of fulfillment not merely having the opportunity to purchase anything one wants on credit, or getting a nice piece of paper that states that so and so is now a graduate. And then what ?
There are great opportunities ahead, but the states have to innovate. Traditional models in education have to change, spending in infrastructure has to increase, allocation of human capital has to be diverted away from Wall Street and into more productive sectors and especially fulfilling sectors of the economy.
The opportunities are there for this generation to be much better off than any generations, it would be sad to see this country unable to resolve this issue we face, because it is solvable, and it is solvable only here and some few places in Europe, the rest of the world is unfortunately still very far behind.
Thank you so much for your in-depth comment. It’s definitely a lot easier to be financially better off when your parents are from a communist country and you yourself lived there. Often times, those immigrants are the ones who aren’t afraid to work hard and sacrifice. You mention many things which I agree with…the infrastructure in this country is getting old which makes it harder to compete. Money should have been spent all along to keep the artery of our country healthy. And I absolutely agree that often times the incentives are not properly aligned which causes people not to want to improve things and to innovate. And why don’t we get rid of certain regulations or at least simplify it…who knows? It’s probably because the politicians can’t get much done. They’re too busy trying to get elected for the next term. In addition, I do also find it a shame that many talented people take their skills to Wall Street…but I guess that’s where the money is…
Thank You for the reply. I don’t believe that the money is in WS. I work there for many years, I do make good money but so do other people not in finance, but there’s no fulfillment in Finance, unless one works in the very limited world of Project Finance which is traditional finance that actually allocates money for infrastructure projects. That kind of Finance in the US is long gone or very diminished and mostly in the emerging markets, replaced instead by quick-profit in the stock market. No company wants to commit billions of dollars to build a bridge or a road, and collect some boring yield for 10 years, everyone wants to make money short term because if you don’t, someone else will.
When I say that things should move away from Wall Street I don’t want to sound Communist, but when it comes to planning, nothing is more planned then allocating talent to Wall Street. The schools depend on it, because for each that makes it, their endowment gets a boost and many other factors along with new enrollments with a glamorous promise. In any case sooner or later margins will become thinner. Companies like Robin Hood for example that are advocating for zero-commission brokerage will force the traditional brokerage houses to innovate or die, and produce valuable information instead of just commissions which have been going down regardless.
There are already other fields that are better than finance, tech, medical field, or even geology where the hunt for mapping resources is just starting. The reason why I mention incentives for housing is because it is tied in not only to construction sector, but also those who want to upgrade their homes, which is where the specialized jobs will be (solar panels, the various Google Nests and new home tech etc), because the population isn’t growing and most likely will not grow like it used to. Home Depot stock and profit shouldn’t skyrocket only when a disaster comes along like Hurricanes. Society should be more proactive instead of reactive.
I’m not that familiar with WS, and I’m sure you are much more experienced, but the perception is that the money is in WS. Hedge funds and the big banks like Goldman. When I mentioned talent, I was thinking about engineers. I’ve heard that many leave their engineering jobs to go into WS and become traders/analysts (since they’re good at math…the industry wants quants). Recently there has been a lot of talk about high frequency trading…it just seems that some players WS are taking advantage of the average investor.
Yes they are. I’ve day traded for a while and I can tell you that the system is an abomination, not just for HFT, but even the recent movie Wolf of Wall Street does a fairly accurate job at describing what goes on, if anything it is too soft. The problem with the movie however is that most of the pump and dump schemes are precisely engineered by the bigger brokerage houses. The mass media doesn’t help either. In general however I am seeing more transparency, and there is a true effort from some to make the market more equitable, mainly because the average investor is losing trust in the system and this is very dangerous in the long run. The market for good or bad remains today unfortunately (unfortunately because excessive regulations, lawyer fees, high debt especially on the young work-force etc make it impossible to start a business) the only track to upward mobility, that and winning the lottery.
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Because I live in a decent country which provides me with a good standard of living, education and health care. I do not live in the US, where the economy is seriously imbalanced where your governments spends trillions on one war through your taxes, where your government spends millions a day on unnecessary military spending. Your schools are extremely underfunded and your health care system is a joke. Your health care system care system causes thousands of personal debts and causes millions to become bankrupt. Your education system is a joke, your higher education system is laughable.
Where I reside, you can get a grant (which is not selective but based on household income), for free for example if I made £30,000 my children would obtain £3,000-£5,000 per year, and university in the UK is £9,000. Also, you attend university without paying until you earn £21,000 or more ($30,000 or higher) and if you do not pay it back within 30 years, the debt is cleared. In addition to this, we have an array of Government loans which have little or no interest.
Also in Scotland, university is free (if you live there) and Scotland has highly selective and prestigious universities (University of Edinburgh- the UK version of an IVY with a 10.7% acceptance rate and only costs $13,000 (if you come from outside of Scotland) (not bad for a World class university) and you do not pay it until you earn over £21,000/$30,000.
Also in the UK, all universities cost the same. So Cambridge (considered to be equal to Harvard and Yale and Princeton, or in some opinions better than), costs about the same as a bog-standard university and at most double of the cost of a college education.
Wales also has Cardiff which is a Russell Group university (similar to your Ivy League).
Cardiff University will charge an annual fee of £9,000 per annum.
“Subject to terms and conditions, students who live in Wales and are studying towards their first degree will not have to pay their tuition fees upfront. They could be eligible for:
a non-repayable tuition fee grant of £5,190 from the Welsh Government (subject to terms and conditions).
a repayable tuition fee loan of £3,900 which you only start to pay back when you have finished your studies and are earning more than £21,000pa (subject to terms and conditions).”
If you study an NHS funded course (undergraduate health courses – Dental Hygiene, Dental Therapy, Midwifery, Nursing, Occupational Therapy, Physiotherapy, and Radiography), the NHS pays your fees for you.
“Jobs aren’t as stable? Learn new skills. Find a side hustle. Be flexible in re-locating. And some may not agree, but maybe major in a field which is in demand. The internet has opened up a lot of opportunities to earn money as well as to gain knowledge which may lead to money making opportunities. Your job doesn’t offer a pension? Make your own. Higher education is expensive? Consider going to a community college for a few years before transferring to a bigger university. Look for scholarships and apply for financial aid. Work part-time while going to school. While this may be an oversimplification of the solutions available to the obstacles in this generation, it is much more productive to seek out possible solutions rather than to just complaint about the problems.”
Well, people have to deal the card they were handed. I feel bad for you and for everyone in the US.
Your: healthcare, government, education system and higher education systems are a joke. No wonder so many people may not end up financially secure.
Your education system is too lenient, a girl who got straight A+’s in her classes, ended up in set 4 out of 7 sets in the UK system (my niece had this girl in her class, as my niece was her buddy and took her to her lessons, as my niece was Set 1 everything and that girl boasted about her A+’s all the time they were friends and classmates)
Thank you for your informative comment. I know many people in this country who feel the same way as you do.
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