January 15, 2019
Savings Tips Help Millennials Get Serious
This is young adults’ financial dilemma in a nutshell: you’re well aware you should be saving money, but you admit you’d rather spend it on the fun stuff.
Yes, paying the rent or student loans every month takes discipline. But it isn’t enough. Even more discipline must be summoned to save money, whether in an emergency fund or a retirement plan at work.
Tia Chambers, a financial coach in Indianapolis and certified financial education instructor (CFEI), has put some thought into how Millennials can overcome their high psychological hurdles to saving.
The 32-year-old lays out six doable steps on her website, Financially Fit & Fab, which she recently elaborated on during an interview.
Get in the right mindset. “It is the hardest part,” she said. “When I speak with clients, money is always personal, and it’s also emotional.” The best way to clear the emotional hurdles is to keep a specific, important goal in mind that continually motivates you, for example buying a house. Or create a detailed savings challenge, such as vowing to save $1 the first week, $2 the second week, $3 the third week, etc. This adds up to $1,378 at the end of the year, she said.
Cut expenses. Some cuts are no-brainers. Scrap cable for Hulu and Netflix subscriptions. Drop that gym membership you never use. The biggest challenge for young adults is saying no to friends who want to go out for dinner or drinks. Chambers suggests enlisting your friends to help – after all, they’re probably spending too much too. She and her friends have agreed to go out one weekend and save money the next weekend by hanging out at someone’s apartment. Another idea is happy hour once a week instead of twice. …Learn More
November 20, 2018
Workshops Teach Salary Negotiation
At a recent workshop in downtown Boston, the mostly female audience was asked whether their anxiety level goes up when they ask for a raise or negotiate a salary for a new job.
Hands shot up, and the room erupted in boisterous conversation. “I’m worried about being perceived as being greedy,” volunteered one woman. Another said that her employer told her she earns less than her coworkers because she’s only in her 20s – “even though I’m doing exactly the same things!”
Workshop facilitator Lauren Creamer explained that many women find it difficult to ask for a raise, because they face a double standard that treats them differently than men. “Women are expected to behave a certain way. They’re either nice or competitive and aggressive,” she said. Asking for a raise can be perceived as too aggressive.
Over a lifetime, lower pay for the same jobs their male coworkers are doing put millions of women behind the 8 ball when they’re trying to pay back student loans, buy a house, and save for retirement.
To help them overcome their fear of asking for a raise, the American Association of University Women (AAUW) is introducing salary negotiation workshops around the country. “Pay equity – and financial security – is one of our major goals right now,” said AAUW’s Alexandra Howley, who coordinates the Massachusetts program with the Boston mayor’s office and the state government.
In AAUW’s workshop in Boston last month, Creamer and Robbin Beauchamp gave advice in four areas to the women – and three men – attending.
Know Your Value
- Before negotiating a raise, be clear on the unique benefits you bring to your workplace – effective facilitator, top salesperson, organizer, etc.
- When applying for a new position, tailor your skills and experience to fit the job description in a way that highlights your value to a prospective employer.
Know Your Target Salary …Learn More
November 13, 2018
Millennial Cities and Those Left Behind
Sumat Lam, a recent college graduate, was skeptical when his Silicon Valley employer transferred him to Austin, Texas. What he found was a high-tech mecca that defies the stereotypes of 10-gallon hats and Southern drawls.
Google, Apple and Amazon have established outposts in the “Silicon Hills” of Texas’ Hill Country. The young workers moving there are “bringing in their culture and influences from Boston and New York,” Lam told VOA News.
Taylor Hardy lives in Dayton, Ohio, but she might as well be living on a different planet.
This young nursing assistant can barely eke out a living. Her plight is shared by too many others in this former industrial hub that has been in a downward spiral that accelerated after plant closings by National Cash Register and General Motors during the last recession. The loss of high-quality blue-collar jobs contributes to Dayton’s 35 percent poverty rate – nearly three times the national rate.
Hardy, a single mother, and the boyfriend who lives with her, earn a total of $27,000 a year – she has $5 in her bank account. “I work all these hours, and I miss all the time with my kids to make … nothing,” she said in the PBS Frontline documentary “Left Behind America.”
The contrasting fortunes in these two cities – Austin versus Dayton – are playing out around the country. Young professionals are streaming into Millennial boomtowns from San Francisco to Boston, where growth seems almost unstoppable. But outside these hot spots are struggling Midwestern and Northeastern cities that have become deserts, devoid of opportunity for their young adult residents.
“Historically, many young American adults have left their hometowns to chase better opportunities,” said Kali McFadden, senior analyst at Magnify Money. “But not all millennials have the same work opportunities,” she said about her firm’s new city ranking of the employment available to young workers. …Learn More
October 4, 2018
‘Retire Rich!’ Don’t Believe the Sales Pitch
If an alien were to drop in to study earthlings’ retirement, it would have to conclude that saving is either nearly hopeless or super easy.
Many Americans approach retirement planning with dread – hardly surprising, given that only about half of working-age adults are on track to have sufficient savings to retire in the lifestyle they’ve grown accustomed to while working.
But there purports to be an easier way – and it’s on YouTube. Googling “retirement” turns up all kinds of outlandish promises of nirvana for regular folks. Examples of YouTube titles are: “Retire Young. Retire Rich.” “Guaranteed Ways to Retire Rich.” “How to Retire in 10 Years – Much Easier Than You Think.” You get the picture.
Don’t be fooled. In a 401(k) world, what workers need is determination, planning, and persistence to ensure they’ll be prepared for old age. YouTube offers only magic bullets.
Many of these exploitative videos are targeted to 20-somethings new to the financial world, who may be more vulnerable and persuadable. But perhaps they are also able to attract hundreds or even thousands of viewers because they offer easy solutions to what may be our most anxiety-producing financial challenge: Will I ever be able to afford to retire?
Yes, one video claims. Retire at age 40! The self-appointed retirement expert in this video, who does not identify himself, hides behind cartoon illustrations on a white board to display his mathematical comparisons of workers who started saving at different ages. The point of this exercise is that people who start early will wind up with a better-funded retirement, due to compounding investment returns, than those who start in their 40s or 50s. So far so good.
But things quickly go downhill when he claims that it’s possible for a 23-year-old to retire in 17 years. You “don’t have to work another day in your life, and you’re still able to do the things you want to do,” he says, allowing this tantalizing prospect to sink in with the audience. But his retire-at-40 scheme has a catch – and it’s a big one. To achieve this goal, a 23-year-old would have to save half of his or her income. Young adults are trying to achieve independence – not move back in with their parents to follow his financial prescription. …Learn More
September 20, 2018
US Fertility Falls in Midst of Recovery
When the economy is expanding and more people are working and earning more, they can afford to have more babies.
But that time-tested connection between the economy and fertility seems to be broken. During the recovery that followed the 2008-2009 recession and continues today, the U.S. fertility rate has dropped quite a bit.
Lower fertility is of interest to retirement experts because it has serious implications for our aging population. AARP’s Public Policy Institute predicts a decline in the number of family members and friends available in the future to care for the elderly. Fewer babies also mean fewer workers will be paying into Social Security, in the absence of an increase in immigration.
Of course, fertility rates in developed countries like the United States, Germany, and Japan are far below the post-World War II baby boom. But the very recent decline in this country is striking. The total fertility rate, the best measure of current fertility, is 1.76 births per woman. This is well below the rate of 2 births per woman a decade ago.
A study by researchers at the Center for Retirement Research at Boston College identified four structural changes that are pulling the birth rate down. …Learn More
September 18, 2018
Scam Alert: Student Debt ‘Relief’
Despite numerous state efforts to crack down on fly-by-night firms falsely claiming to reduce or eliminate young adults’ student loans, new firms keep popping up.
Their social media pitches and websites promise borrowers things the companies can’t possibly deliver on. They appeal to potential customers struggling to pay student loans with slogans like “Get Rid of Your Student Loans Today!” or “$17,500 in Up Front Forgiveness” – “100 percent guaranteed!”
In a high-stakes game of Whac-a-Mole, attorneys general in numerous states have repeatedly brought legal actions against these so-called “debt relief” companies in cases going back at least four years. Massachusetts resolved one case this past summer, and Pennsylvania filed a lawsuit last fall. Florida has aggressively pursued several debt relief companies recently. The Federal Trade Commission and the Consumer Financial Protection Bureau have also gotten involved.
Student loan borrowers “are desperate for help, which is how these companies are able to grab them,” said Betsy Mayotte, founder of the Institute of Student Loan Advisors, a Boston-area non-profit she founded to provide free help to people wrestling with college loan payments.
Mayotte described egregious fraud against a client who came to her organization and had been paying her student loans for years, whittling down the amount she owed to $5,000 – but it ballooned to $12,000 after she got involved with a debt-relief firm that took over her loan payments. The company put the loan into the federal government’s forbearance program, where it went unpaid while accruing interest for two years. After the forbearance period expired, the debt relief company neglected to resume the loan payments, despite continuing to collect its monthly fee. The customer defaulted on her debt unwittingly – but never got a notice because her contact information on the loans had been changed. … Learn More
September 13, 2018
College Debt Can Limit 401(k) Saving
The share of students borrowing money to pay for college increases year after year, and they’re borrowing more every year. Total student debt, adjusted for inflation, has tripled in just over a decade.
The loan payments, which can be a few hundred dollars a month, take a big bite out of young adults’ still-low levels of disposable income. The debt makes them more prone to bankruptcy and lower homeownership rates.
A key question is whether this pressing financial obligation might affect their preparation for a retirement that is several decades away. Here’s what researchers Matt Rutledge, Geoff Sanzenbacher, and Francis Vitagliano of the Center for Retirement Research learned about student debt:
- By age 30, the college graduates who are loan-free have saved two times more in their retirement plans than the graduates who are paying off debt. (Perhaps surprisingly, the presence of student loans do not seem to affect the amount saved by students who didn’t graduate, though they do have substantially less in their 401(k)s than the graduates.)
- The amount owed by college graduates with loans does not matter. The mere existence of the debt is enough to constrain saving. …