The show Til Debt Do Us Part with Gail Vaz-Oxlade really highlighted this. You don't NEED to spend hundred of dollars a month on clothing. You WANT to spend hundreds of dollars a month on clothing.
I loved that show!
If you are dipping into an "emergency fund" often your budget has missing line items. Water heaters break, roofs need replacing, and car insurance is due every 6 months. Those aren't emergencies.
Agree. If you own a house or a car, you know things are going to break and cost money -- you don't have a magic roof that will never leak or tires that will never need replacing. You need to have some money "at the ready".
We have everything paid off, car, house, etc. The property taxes where we are at are huge, but there is nothing we can do about that.
I totally agree that being debt-free is one of the best ways to keep your expenses low in retirement. And making the right choices will make that so much more possible; for example, don't "move up" to a bigger house and consider downsizing to one car (which is more possible than people would like to admit).
As for property taxes, yeah, you can't change the tax rate where you live, but you aren't required to live where you live. Yeah, the kids and the cost of moving and other factors ... but if push comes to shove, you do have the choice to live elsewhere.
I can see them paring back some benefits to those who have a nice sized nest egg so they can provide a living to those who have not saved anything We can't have elderly out on the street. My husband and I don't even factor in social security for our retirement planning because it probably won't be there in 15-20 years for those who have a decent savings.
I can see this happening too, and I resent it. I've never been a high earner, but I've worked my butt off since I was 16, and the government has taken 6.2% of everything I've earned for decades. If I'd had that money, my savings would have been higher. I do deserve a return on all that money.
There needs to be good opportunities for those that don't go to university.
Such opportunities exist in the form of trades. My electrician brother makes more than I do, and I have two degrees.
My experience is that most everyone can save.
My DH started his 401k when he was making $6.50 an hour (1992) and living with three other guys on bunk beds in a one bedroom apartment.
Today, in 2020 DH has over 900k in retirement. Never having made more than $30 an hour. And he is 47.
Two comments:
- Yes, that's how I lived just out of school: I lived in a 2 bedroom /1 bath apartment with five roommates. When my husband and I were first married, we sold one car and made it work. We lived an hour away from his office, and I was in college and working part time. It required lots of cooperation, but it meant we were able to save.
- Years ago someone told me that your first $100,000 takes forever to save, but then it takes off. It's true: I'm nearing retirement, and on a good month I make more in interest than in my paycheck. But getting to this point can be discouraging.
In my opinion, personal finance cannot be effectively taught to 16-17 year olds in a classroom. It is difficult (possibly impossible) to concretely teach it. Teachers have students set up fictional budgets from fictional jobs where there are no rewards for good decisions nor consequences for poor ones. Add to that an age group who thinks, “wow! I could make 1K per week!? Easy street for sure!”
Agree -- and it is being taught in math classes, in Civics classes, etc. It doesn't "stick" for a couple reasons:
- 9th and 10th graders still have a fantasy that success is all about choosing a high-paying career. They spin stories about how they'll star in the NFL or be rappers with mansions in multiple cities. Since the Kardashians became "a thing", the idea of heading up a cosmetics company has been a popular idea. You-Tube star and Professional Video Gamer are also popular fantasy occupations. These kids aren't interested in studying budgets because they are SO SURE that they're going to make so much money that it just won't matter.
- Kids see that their parents are struggling with money, but they figure that it's because their parents made bad choices -- they seem to think that their parents chose assistant fast food manager as a career /not that circumstances pushed them into that low-salary position. They think that they will never be in that same circumstance because they're going to make better choices.
- Older high school students who have part-time jobs tend to think "they're earning their own way" because they're paying a car payment and a phone payment. They vastly underestimate the cost of taxes for full-time workers, the extras that come with housing, and the incredibly high cost of insurance. They get the idea that if they have money in their pocket with a part-time McDonald's job, the same job full-time will be plenty-enough.
- All too many students are weak at math and just refuse to pay attention to the monster-difference interest makes (whether it's a matter of paying it or watching it build your accounts).
- The whole concept of saving for retirement seems so far away ... and, at the same time, they feel the pull of things they want so badly right now: an apartment of their own, a car, nice clothes, a vacation. Advertising pushes them towards instant gratification, and even if they understand that they should be saving, it makes so much sense to "live it up" a few years while they're still on an entry-level salary ... and surely they'll start saving in a year or two.
- A variation on that theme: all too many girls still see saving and money management as a man's job. They figure they "need" to spend on clothes, etc. until they get married ... and then they'll have a man to take care of all that stuff.
- Or they just don't think beyond today. That's common.
So, yeah, they're getting personal finance lessons in math class and Civics class, but those lessons don't seem "real". It's what I see in high school.
