Here's the thread for the liveblogging of today's Midmorning regarding the study, "Tightwads and Spendthrifts," examining how we handle our spending. You can find background on the study in the next thread. Post your comments/stories here and we'll pick out the most intriguing ones for the broadcast.
Guests: Scott Rick, author of the study; :Larry Compeau, professor of Marketing at Clarkson University School of Business. He was quoted in an interesting article in January about the symbolic tightening of the belt.
10:07 - We're off and running. Question: How well do you and your friends really understand and believe in the concept of frugality. Parents? What do you think your kids' perception of frugality is?
10:11 - Scott Rick, who did this study as part of his dissertation, says people usually consider what else the money they're about to spend could be used for. He concludes that Gen Y doesn't do this comparison.
10:13 - Tyler (in comments) raises the possibility that much of this difference in how people spend is the bank instrument involved; that with debit cards (used widely by Gen Y) creates an illusion of it not really being money, whereas people who hand over the cash (or even write a check) have more of a connection to the money being spent.
10:15 - We tend to be more frugal as we get older because we have more "pain" experiences. Larry says "this particular generation has never had to suffer a protracted economic downtown.
10:20 Women vs. men. OK, here we go. Women, the authors say, approach spending differently, that women tend to see spending as more therapeutic. "It's not clear if their theory is correct," Scott said.
10:24 : Gen Xer married to Gen Yer on the phone. "We're very different," she says.
10:26 - Scott: "There's a genetic component to this."
10:32 - In comments, Jessica raises the possibility that it's the parents' fault for raising Xers and Yers with a sense of the value of acquiring things. Lynn, on the other hand, is as frugal as they come and objects to being lumped into a generational stereotype. And David, father of a 24 year old, says he has to ask his daughter to spend money, she's so frugal.
10:36 - How is debt viewed by "this" generation. Scott says he did in-depth interviews with a wide variety of people who had gone through bad credit and bankruptcy problems. The interviews spanned ages and household incomes. Says he got a difference in the role debt plays. Younger people tended to view being in debt as a natural part of financial accounting. Older people tended to view debt as something that was reserved for special occasions.
10:42 - A father calls and says son went from a spendthrift to a tightwad as soon as he moved out.
10:45 - Talk about conflicted. Jon Paul in comments writes:
I am a tightwad and a Spendtrift. I take responsibility seriously and I could not afford to be anythign else. I am not spending any money on anything other than Child Support, student loans, cell phone, and transportation. ( I am getting rent realatively for free) I am still not able to save.
I'll try to pass this on to the guests next time Kerri comes to me.
10:49 - Larry: There's a mentality on consumers behalf that they don't want to "fix" anything (see comment below from the wife of a surgeon who says he fixes the cars).
10:53 - Scott: There's an evolutionary ancient system that wants pleasure now, but a newer system that can override those desires. He theorizes, though, that there may not be a connection between various generations on how the brain works.
10:56 - Scott says his next study is going to be among couples. Do opposites attract? Can't wait for that one.
This was fun. Keep talking in comments. We'll be here all day.
Poundwise & penny foolish.
I'm a tightwad on things like cars, but have no problem buying higher quality (and more expensive) beer, for instance. We save very aggressively for retirement, but don't watch the day to day budget very closely at all. I'm a stickler for shutting off lights and throwing away food bothers me - I'd rather eat questionably old leftovers than see them go to waste. But I also have no problem going out for a nice dinner from time to time.
I am confused on the time period of Gen Y. I was under the assumption that Gen X went until 1980 or later. I've heard that Gen Y doesn't start until 1988. So, what age range are we supposed Gen-Y-ers?
My generation, generation Y, is the first generation who has been able to rely almost entirely on debit/credit cards where the sense of spending is greatly diminished. My mother never let me use a credit or debit card - forcing me to use cash and the occasional check with proper book keeping measures - and I don't have one dime of debt (outside of student loans). When someone uses a debit/credit card, it is easy to forget what you are spending and how much you have. It doesn't feel like you are actually spending money like when you have to withdraw money and hand actual paper money over when making purchases.
Gen Y, for purposes of the discussion, is considered "people in their '20s"
I am 38 and my younger brother is 30. He's totally different than I and my older brothers. While I never had a TV in college, he had the latest flatscreen, the best stereo system, all the CDS. While I wore cheap clothes, he wore name brands. He seems to have improved since college but he is still a spendthrift. He bought a house at the top of his price range where as I bought one at the lower/mid range.
I am 27 and horrible with money, I am attracted to anything electronic it seems. I recently felt accomplished when I had over $200 in my savings acct. I buy for the instant gratification and don't think about the future. My goals seem to be changing... I hope.
I like the idea of "the pleasure in saving" but I have to wonder if this isn't more about security, and opportunity. At home, we're much more financially able to take bigger or more interesting risks if we have a stable base.
What do folks here think about "the pleasure in saving?"
Even my savings plan feels a little spendthrift to me - we've begun investing for retirement and college expenses by investing in real estate. One of the biggest appeals for me, aside from the tangible asset, is the sense of acquisition and the opportunity to decorate. I get to save by spending. I get to shop for home improvement goods and call it part of my investment.
I completely agree with the "thesis" of the show, but (perhaps naively?) think of myself as a total exception. I am hyper-sensitive about money issues. My boyfriend, conversely, simply WILL NOT talk about money. Conversation simply shuts down. Everything I know about his finances and his debt, I'm a bit embarrased to say, I've learned from going through his discarded mail. He refuses to budget, or even to talk about short-term planning, but is never at a loss for a new cell phone, MP3 player or car accessory. We're a well-matched couple otherwise, but this is definitely a source of stress for us.
I think the Gen Yers are getting caught up in the materialistic pull around us. We get bombarded daily on things that we "need" and with the benefits of credit cards you go and buy the latest gadget and charge it. Being current with what is in overrides the mounting debt.
I am 51, and my parents lived through the depression and world war II. Even my generation along with todays has never really been hungry enough, broke enough, or desperate where there is no county welfare. The years before the second world war had no back up plans for poor people, everyone was poor and raised their own vegetables, did farm labor for just a place to sleep, and learned to survive by thinking.
As Mom to a Gen Y daughter and someone who watches young people every day (I work in a public school), I think this generation comes into adulthood with a disproportionate sense of entitlement. They tend to presume they deserve the best of everything...it takes a while for them to figure out that's not the way things really work.
Also, most of my friends don't eat leftovers!!!! I think that is a sign of how we don't understand the idea of minimizing cost.
I am the same way as bsimon. I can't bring myself to buy big ticket items because I feel that saving is more of a "virtue" than owning a new car every 2-3 years. Our generation was brought up in a hardcore culture of consumption, we have never really been taught to save. Everywhere we look now, including among a good portion of our peers, spending (read debt) is the norm. If frugality were taught as a virtue at a younger age, maybe the reality of debt would sink in and become a more tangible concept.
I find myself saving money, working as a temp, so I can go on to other things that interest me once this temp period is over. I consider myself an actor, so I know that I will need the money I'm making now for later use if I plan to follow that dream.
I don't take any pleasure in saving. I don't even realize on a weekly basis that I'm saving...it's directly taken out of my paycheck and put into a high yield savings account and my company's fully vested 401 K. The rest is dumped into my checking and aside from paying my bills, its fair game. I'm living very much within my means, I don't spend what I can't afford, I don't even own a credit card. But if I like a quality item, I don't mind spending money on it. Is that being frugal?
One thing I think affects the generation is the upcoming trend of "going green"; with this in effect I do see less waste, both in money and packaging. I see greater desire to buy less food, and be more choosy. I do think the trend of "going green" can and will affect the "spending" factor, in the area of buying less, with the hopeful result of less waste.
I recall a program on MN Public Radio a few months ago, similar topic and format. The speaker said his research indicated that people in times of transition tend to be spendthrifts. this is also true of societies in transition. Chinese people are in a huge transition and those who have a decent income take huge vacations, and spend a lot on the best consumer goods and luxuries.
The program was a hopeful one because the research indicated that as we aage we don't really need to prove ourselves by the vacations and luxury goods we have. We calm down in spending and as we move into the later years we become far more interested in divesting, passing both values and opportunity on to help others and help the next generation. People who were acquiring in their earlier years start giving it away in their 60's.
My daughter is 24 and I have to ask her to spend money. In August she moved into her own place and furnished it completely from Garage Sales. She is an Elementary teacher, and while she doesn't make great money, I know she can spend a little on herself. She is more worried about paying off her student loans.
Megan, as you probably heard, you fall into the "unconflicted" category. Are you frugal? Hard to say, but you are neither a spendthrift, nor a tightward.
I'm 27. While I'm personally a tightwad, my generation and the generations below mine, seem to require possessions to make them happy and therefore overspend in order to achieve happiness. Overspending seems to be attached to an emotional reaction.
Also, it seems that too many parents have overspent on their children during the past couple of generations; leaving generation X and Y with the idea that they are accustom to a certain lifestyle that must be achieved at all cost. It is also the notion that we are judged by the things with own rather than how we live our lives and how we treat others.
I'm in my early 20s and I am earning well below the average for a college graduate. I wouldn't necessarily consider myself a tightwad. I would rather say that I'm very conscientious about saving my money. Luckily, I have no debt. My college education was paid for by my parents and scholarships. I drive an older car, passed on to me from my sister. I live with relatives, rather than on my own. I bring my lunch from home. And because of all this, I have more money in the bank than people my age who are making 2 or 3 times as much as I do.
I do make the comparison that Scott Rick is referring to when I think about what else my money could be used for when I'm about to spend it. To further the point, an example: Some people think it's pointless to clip coupons that are worth $0.25, $0.50, etc. But to me - I think they're worth a lot. It can buy me a pack of gum, or a snack from the vending machine. Over a short time, the cumulation of savings can buy me a drink from Starbucks.
It annoys me to be clumped into the Gen Y stereotype.
I'm 24 and I recently started a savings account for the purposes of establishing a 3 month emergency fund. I've got it set up so that every paycheck a certain amount is automatically sent from my checking to the savings. It's been very fun watching that account grow (especially with a big boost from my tax returns, which went directly into savings). As soon as that account is up to where I want it, I'm probably going to shift that automatic transfer to an index fund.
Then again, I generally have little problem spending anything that's in my checking account. I'm currently working out the right balance between savings and spending.
I am 29 and my husband is 35. We were always frugal and pay our credit cards in full each month. We adopted two kids last year and it helps that we are so cheap. We don't know how other families do it and understand how quickly debts can accumulate. We do not have cable TV or some other luxuries, but we own a home and are not having problems paying our mortgage. We went into that with our eyes open and with caution, which seems rare lately.
(I think I am more frugal than my husband. I yelled at him for almost throwing away the cotton from a medicine bottle. - It is clean so I use it for a big cotton ball.) :)
The comment about those who have degrees in subjects like computer science can't be more true. I have a double major in Comp Sci and Mathematics as well as being a Gen Y'er and am more than frugal. Most of my friends being in the same industry are similar. However I'm not so sure it's about being frugal for people like us rather than understanding the power of compound interest.
I find this whole issue interesting. I am 50 and have a 25 year old daughter. I think both she and her husband are atypical for their generation. She could have easily been the poster child for a spendthrift-an only child, parents who are reasonably well off, private school educated, didn't want for much at all. She is not a spendthrift at all. She spends on what she wants at needs but does her research before doing any major purchases. She also seemed to be "wired" this way. From the first time she got allowance she thought very carefully about spending it.
At present she has a modest home, just bought a new car but has no other debt beyond that-no credit card debt, no school loans. In part she was raised to spend responsibly but I also think it seems like it's just innate.
My siblings and I are all members of Generation Y. I am considered the frugal one among my siblings and I am constantly bothered by the way my siblings spend their money. We are all in college still and are living on small incomes. I watch my siblings racking up credit card debt with the idea that they will be able to pay it down in a few years when they graduate and have a career. I often find myself in debates with them about the interest rates they are paying on their lifestyle.
On another note, I have watched my mother suffer great economic hardship and I am find that it makes me want to save even more, for my future and for hers.
I'm 31, I was married to a man 10 years older. He spent like money grew on trees, and even though he was never steadily employed continued to do so on credit cards. I saved the 12K for our wedding, while he spent more than that on what ammounted to nothing. When we divorced 3 years later we had accumulated well over 40K in credit card debt. He declaired bankruptsy in the middle of the divorce and I was stuck with most of the debt. Now, 2 years later, making just under 30K a year, I have cut the debt to less than 20K (about half).....I guess I'm a tight wad these days. I'm sure I could have cut the debt more, but I didn't want to just live to pay it off, I needed to have a real life too.
I'm 29. I have a credit card, work for a non-profit, and make about 31K a year. I have been spending the same amount/2 weeks for most of my lilfe, about $300 for discretionary funds. Earlier in life this meant I accrued some credit card debt. As I've gotten salary increases, my income has increased and my spending has stayed about the same.
I now have no credit card debt, and sock a way a good chunk of money every month. So, as I've gotten older, I've become more frugal. It's a conscious decision, as well, to not allow my spending to rise as my income has, but it hasn't greatly impacted my life as I live it.
Just my savings account :)! But one problem is that I don't know what to do with funds as I accrue them. I've had a 401K for about four years now, but I suspect that my savings are actually losing value in the current market. Unfortunately, I'm at a loss as to what to do about it.
It is hard to pay your way through college or graduate school these days. Debt has become a way of life from the get-go.
I spend more on basics because I work and am busy. I don't want to spend all my precious free time hemming and hawing over which item is cheaper and driving from store to store. My mother was a stay at home mom, and hence she had the time to shop around and "do-it-herself." I'm not sure in the long run if I'll make more than she saved, but don't want to risk losing my marketable skills
I agree with many of the results found by this study, but aren't most of them complete common sense? Of course people that lived through hardship will be better at saving, of course my grandparents who lived though WWII taught me not to waste food, of course engineers and finance majors are better at managing finances than English majors. I am a broke first generation immigrant college student, of course I am less likely to buy an iphone than a someone that gets everything handed to them by their wealthy parents.
I'm in the nurture camp, although there may be some genetic piece to this. I'm 41, adopted, & raised by older, depression-era parents. I was raised to be frugal so the I can spend on important things and buy quality. I'm so glad I'm finally "en vogue" instead of being considered cheap. I'm glad someone is drawing the distinction between the two because I'm one of the most generous people I know!
As this blog's picture is of a "Hermes- Birkin" hand bag... that run near the 15,000 dollar mark I question...
As woman gain ground in the work place and earn more money do woman spend less on appearance given their past objectification and /or have men began to spend more on their looks as woman feel more at ease with objectifying men as an physical object of desire? Could you expand upon this idea and the generation y's spending habits? Does this fluctuate in regards to sexual preference? Gay vs. Lesbian
The culture is the problem.
It's simply uncool to be a saver, and not use debt.
My realtor, banker and closer were shocked when my wife and I actually could say we could put 20 percent down on our new house.
"That just never happens anymore," was the collective refrain.
Just the other day, one of my coworkers was practically bragging about how long he's going to have to make payments on his new car. I just can't imagine this being the case back in the 1950s.
I'm a Gen X-Y er (37rys old).
My wife and I are not shy to spend money on quality items but every purchase is calculated. With the exception of our Mortgage we are completely debt free. We both grew up with parents that stressed never paying unnecessary interest. Not paying off your cc purchases at the end of each month was taboo. Always take advantage of employer contribution savings plans. Never pay retail.
These rules has followed both of us into our 30s and we now feel very good about the prospect of retiring the way we want to.
Female, almost 50 and a debt collector. I fell into the job by accident - knew nothing about it beforehand and gave money/personal finances very little thought. Needless to say, I think about money ALL THE TIME. If your listeners could hear some of the stories I do they might change their spending habits. Think about the time and energy spent on advertising and packaging to extract dollars (that you probably don't have) from your wallets. Look around your house... how many things do you have in your closet that you purchased and never used? Losing weight permanently takes descipline and lifestyle changes... same goes for getting and staying out of debt.
read the blogs
The pain that is shared with me every day you would not believe.
I am a minority 32 years old from a dwindling population of black males that are not incarcerated. Consumption is a "white" thang although minorities consume just not at the rate of the majority. My attributes have been directly changed by the popular culture at large and inner-city living. Both although related are completely different in effect and affect. What part does the location geographically matter in your research? Isnt poverty the same everywhere when you only earn minimum wage?
I'm not sure which of those labels applies to me.
For me it's all about freedom. I don't like to be tied down, and debt ties you down. Savings gives you freedom.
I have no problem spending money on things I value, but I'm pretty cheap about "necessities" and other things that I don't care about. Because of that, I have no debt (I made my last house payment in February.)
I don't worry a lot about money, my natural cheapness naturally just takes care of it.
In case it matters, I'm a 49 year old software engineer.
I can't keep up with all the blog comments.
I am entirely conflicted because I am a tightwad and a Spendtrift. I take responsibility seriously and I could not afford to be anythign else. I am not spending any money on anything other than Child Support, student loans, cell phone, and transportation. ( I am getting rent realatively for free) I am still not able to save.
Fear is my primary motivator for making spending decisions.
I am neither a gen Y nor a parent of a gen Y.
Frugal spending comes from nurturing. At the same time, it goes out of control if the family is always running to get the kids to their classes.
Myself and my wife talk about the cost of each and every item with our kids whether they understand at this time or not.
I heard about the word "frugal" from my CFO in 2000 and laughed at him. Now I realize the need for being one.
My husband is a surgeon and I am a teacher. We began our lives twenty-five years ago and out of necessity were tightwads and then that became a habit. We have raised two boys in the same 2000 square foot house and the the two cars we all share
are the only cars they remember. My husband keeps them running. Needless to say, we have amassed money over the years because of our frugal lifestyle. People used to tease us calling my husband the "Sam Walton" of the medical world
though they meant this kindly. I have been called on the carpet when the kids were little because they had a wooden highchair (circa 1950) given to mean by an older neighbor. "How can you have your children sit on a wooden seat?" they would say. I am here to say my children turned out to be lovely human beings in spite of the fact that they did not have padded high chairs or they had to share a room and a bathroom until one went to college. We all live in the same town and share two cars although they normally ride their bikes.
I guess our trips to Europe (going off season and staying with friend or hostels of course) and the fact that their college is paid for not to mention the lake cabin which we bought for $17,000 years ago
and tore down and rebuilt ourselves with many salvaged materials was worth the lack of a big screen t.v. and high end clothing.
@ Dan G
It sounds like you're finding the the right balance between savings and spending for you - and you're ahead of the game. Will you retain the 3-month safety fund or expect you'll be able to tap your index fund in case of emergency?
The caller on the air now is talking about the shift in perceived necessities. Wonder how many people think an emergency fund is necessary...
Interactive Producer, MPR
A very basic ground rule of financing is that you have to spend less than you earn. However, very few people understand or practice this concept. Even our government cannot live within its means - our deficit is growing!
Credit is readily available and readily used and we have too many options of purchasing products that we can't afford.
I see generations alternating-parents who were raised in the depression and saved aluminum foil, their children (me) proud of not having to worry so much about spending. My children are very much tightwads, thank goodness! I do think there is a difference between buying high quality more expensive things (shoes), and wasting paper towels, paper cups, or buying lattes every day.
Is there anyway in our society for a gen Yer to avoid huge debt? You have to take out huge student loans to have a chance of getting a job and then the jobs are still not guarenteed.
Ps. I am 31 and thanks for reading my comment.
I am a 21 year old who has a "professional" office job.
I make quite a bit more money than most people my age. I have almost no credit debt because my parents always told me horror stories as a child so i would not be allured by the appeal of instant money. On the other hand, whenever I did have $5 in my pocket, from allowance or what have you, they would take me to target to buy the latest toy. I think they were trying to instill the sense of pride you get when you buy something for yourself, but they missed the boat on savings. I am unable to save money in a traditional bank, but I have recently started a mattress savings account. I put $20 a week in there, i know there's no interest, but I also forget it's there.
the gen Yer's were raised with the belive that we are consumers, and that is our sole purpose.
I am a generation y'er.
The american market is full of so called quality. Everyone is encourage to run out to Walgreen's or Target... buy up the plastic do-dads we really do need right? Supporting the Chinese economy not the american... what happened to quality craftsmanship? I think it is the media savvy generation who desire to show how wasteful we can be.... after all it's the american way, right?
I do think we have become more accustomed to having debt at an early age, due to having to take out huge loans just to get degrees-- which are necessary nowadays. Kids I went to school with felt they owed so much, they may as well lease an expensive car too!
I do think the change in credit availability will affect this attitude.
I also think we learn some skills in self-restraint through repeated practice.
I am 32. I grew up in a wealthy family, but we were extremely frugal. We recycled before it was "cool." My mom, who owned a business, still made dinner most nights. We ate left overs, shopped sales and didn't get everything we asked for. I worked for my family from the time I was 12 to get money. I paid for college myself. I got into debt in my 20's and now I am getting out of debt and have become frugal myself. I make great money and I save 10% for retirement and another 10% for my "rainy day fund."
Kids get whatever they want immediately now. So, I would expect this to only get worse as Gen Y raises kids who will be even worse than we are.
I am of the older generation and I don't ever remember a period where there have been so many doomsayers. Between the evangelists telling us the end is near and the environmentalist's forecast isn't much brighter, why is it a surprise that the younger generation doesn't see a future in saving?
It seems the majority of the people posting are rather responsible when it comes to their finances. It goes to show that smart people listen to Public Radio. (no, I don't work for Public Radio)
For the record, I'm 33 and am quite frugal.
I am a "Gen X-er" and would like to ask any "Gen Y-er" if they change their own oil on their cars or wash their car instead of going through a carwash, or take care of their own lawn instead of hire a service. In other words, could the two generations be seen as "do-it-yourself-ers" vs. "pay-someone-else-to-do-it-ers"?
Thanks to Carrie, everyone at MPR and the callers and posters for a great show.
Larry D. Compeau
Associate Professor of Marketing
Clarkson University School of Business
Potsdam, NY 13699
I think I'm with Tony in that I want to avoid debt because it ties you down. The only real liability that I currently have is a lease on a house and I'd like to keep it that way until I settle down and start a family.
I'm absolutely going to keep the emergency fund. With the economy the way it is it'd be foolish to rely on investments in an emergency.
The main reason that I said I'm trying to find a balance is that I haven't really had to change my spending habits or be overly careful with my money to form the savings account. The raises since I started at my job have accounted for most of my savings. I just have to forgo buying any more large ticket luxury items (e.g. I impulsively bought an LCD TV about 8 months after I started my job).
I wonder what your guests think about how social changes to the family have created differences in being frugal early in adult life. I am more typical of my parents' generation in that I married and had children in my early twenties. I was forced to figure out what my parents' generation figured out--which was to create a stable financial environment for my family. Most of my peers do not begin to think about this till they are in their middle thirties, when they have their first child. Till that time, they feel entitled to live as if they are not strapped down, which translates to vacations and sporty cars, going out a lot...essentially, NOT living frugally.
I think your comments are on the mark. Postponing an overwhelming need for frugality (looking out for family versus self only) would certainly seem to lead some of us to being less frugal. Yet, we do find that identity plays a role. Otherwise all single people would be spendthrifts.
One ongoing research project I should wrap up soon focuses more identity and suggests that it is how we view ourselves that is one driving force in how we spend and what we consume.
Associate Professor of Marketing
Clarkson University School of Business
Potsdam, NY 13699
I only heard the last 20some minutes of the show, but plan to go back and listen to the entire thing. At age 31, I've had my credit ruined twice now - coming straight out of high school into college, where credit cards were practically thrown at me in the student union. I didn't finish college and instead my husband and I took to rebuilding our credit during our mid-20's so that we could buy a house, become foster/adoptive parents, and begin our family with a solid financial outlook. Everything was going great until we discovered our mortgage servicer was stealing from us by way of junk fees. We started to fall behind and now our home feels more like a sinking ship. After surviving nearly hitting bottom from college credit card debt, this new situation has driven us to bankruptcy. I consider myself to be more financially literate than most of my peers, however I haven't always practiced what I know to be the smartest choices. I anticipate making alot of changes in the wake of Chapter 7. Sometime's I guess it just takes learning the hard way. As costly as it is to our credit and our overall situation to be in bankruptcy, the real cost would be if we didn't change our habits and just keep on struggling.
I'm always glad to hear people talking about money and how/why we spend, it helps me understand my own habits all the more, which in turn empowers me to change them.
You know, it's funny. The show's been over for a half an hour and this end of the newsroom is still talking about our spending tendencies. Everyone who has a spouse is commenting on the comparison with said spouse. It's one of the reasons, I'm scared to death of the next round of research on couples -- and why when I was putting this together today I said, "Oh, man, I hope my wife doesn't see this and lead us into a conversation about spending habits." We're both pretty much on the same page, but I've never seen a discussion about money or spending turn out well.
So, for those of you with spouses... do you talk money?
I'm still not sure I buy "20-something" as a good definition of Gen Y. I'm almost 24 and do not identify myself with either Gen X or Gen Y. I was discussing this with my coworker and we both concurred that those in our range can be neither X nor Y, but some sort of 'happy medium'
I grew up first generation in a working class immigrant family in the South Bronx. We rented, used public transportation and only bought things we could pay for with cash on hand. Today, I am 55, married and have 2 children and one rescue cat. My husband and I have similar values and spending habits. The only debt we have is our mortgage. We drive a 12 year old vehicle and will continue to do so as long as it is economically viable to maintain it. We pay our credit card off in full at the end of each billing cycle.
Our luxuries include attending musical concerts and enjoying occasional meals out. Recently, we were alerted to some unauthorized spending on our credit card (purchases made in California - our residence is in Minnesota). We made a mutual decision to retire our credit card and use only cash. We have learned so much! We thought we were buying only necessities before. We couldn't understand why although we were living within our means, we had nothing left at the end of the month. Now that we scrutinize each purchase, we find that we have excess money for savings. I recommend going to cash only even if as a temporary exercise. You will be amazed what you learn about your spending and consumption! As a nurse, I recall the archaic term consumption applied to a pathological condition: tuberculosis of the lungs, the progressive wasting of the body, a wasting disease. Consumption, a depletion of faculty or resources. Think about it.
"...one problem is that I don't know what to do with funds as I accrue them. I've had a 401K for about four years now, but I suspect that my savings are actually losing value in the current market. Unfortunately, I'm at a loss as to what to do about it." -ISAAC
It's understandable that in uncertain times, people get weary about investing their money, but I say keep putting your money (or at least part of it) in your 401k. Sure things aren't looking so good now, but they will improve...eventually. And in the mean time, by putting your money in the market now, you're buying when prices are low, so that means a better return down the road. And the reality is, you can lose your shirt in good times too.
Other places to put your money: ROTH IRA, CDs, Bonds.
My wife and I are in our 20's and we're dumping a considerable percentage of our income into investments (long and short term), but still make sure we have some fun money too. If you have the money to invest, I say do it. Especially now.
My wife and I talk money pretty often. You're right, it rarely seems to end well; we each wind up accusing the other of over-spending. Though, in reality, we're both pretty responsible.
It's funny because of course everybody always thinks what they spend money on is more important or worth while than what their spouse spends money on.
I'm in the same boat. I don't readily identify with either generation. I've seen the term "Generation XY" thrown around to describe those of us who grew up during the technology revolution (as opposed to the Y's who always had cell phones and the Internet and the X's who were pretty much adults by the time these things rolled around).
Keep in mind that these "generation" designators are broadstrokes trying to describe a particular cohort that, by definition, will not apply to some.
Also, there has been research on money management in couples. One interesting finding is that it depends on who's making it. If the income is equal the decision process are different than if the income is lopsided for either the wife or the husband.
Post script to my earlier comment. Even though she grew up in a single family household with very limited funds for most of her life, my 11 year old daughter is a spendthrift. She is dazzled by brand names and the next glitzy fad. On the other hand, she has the most generous heart I have ever encountered and would give anyone of her friends or family any of her cherished trinkets without the blink of an eye. She has dreams of owning a mansion someday and other grandiose thoughts which she plots in her journal and announces unabashedly at the dinner table. Part of this may be attributed to the upscale environment in a local public school she attends. The rest, I guess to her exposure to this materialistic culture, and perhaps to her personal temperament. We have now discussed saving: budgeting for scarce times and for special things she plans to purchase. We have collaborated on a written plan and review it together on a regular basis. She earns money by working in a local book store and by doing chores. She is finally beginning to understand what a balance sheet is, though her impulses still overwhelm her common cents.
Another point I wanted to make is that of choosing carefully based on values and priorities. For example, we as a family assign an inordinate part of our budget to food, because we value our health and the health of our planet. We consider supporting local, seasonal and sustainable agriculture a wise investment. Would you consider this spendthrift?
My husband and I bought a motorcycle this summer and we did it with cash!
Being called Gen Y is annoying. We're not savingless kids... we're not all Starbuck toting, iPod wearing, self-centered, apathetic losers. That's all I can ever think when the media uses the term.
There seems to be a bit of a paradox where credit cards are concerned.
I know there are multiple factors that go into determining your credit score, but I often hear that a good way to improve your credit score is to charge stuff and then pay it off every month. So in that sense we are encouraged to use credit cards (despite the disconnect it creates between us and whatever money we do or don't have) to improve our credit score.
And then you need a good credit score to qualify for, say, a mortgage (with reasonable terms), which is considered a good investment.
That takes some serious discipline and self-awareness.
So, for those of you with spouses... do you talk money?
We're not actually married, so we haven't been forced to combine our finances much yet. We've talked about it some, but not too much. Enough to find out that we're not on the same page yet.
I'm far more financially literate, but I'm also the one who made some bad choices even though I knew better and am cleaning up the mess from those choices now. Much improved, but not out of the hole yet. I obsess over my finances.
She knows next to nothing about managing her finances, but is sitting pretty comfortably.
Neither of us spends our dollars in what the other would consider to be an unreasonable way. I'll be content for now if we can agree on some goals for ourselves (individually and together).