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| Decision Center | Getting ahead gets harder
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Dayana Yochim, personal finance editor for The Motley Fool, an investor-education group, often hears from parents who want to know how they can teach their children about managing finances. "These parents are worried about their own retirement," she says. "Cutting the apron strings is a move parents have to make to provide for their own futures financially. But it's a hard thing to do when you feel that your children don't have the skills they need."
Compounding these generational challenges is what Yochim calls "incessant commercial wooing." On TV, she says, "it's all about luxury and excess and consumption," right down to the fancy lofts and apartments where sitcom characters live.
"That is not how people really live in New York City," she says. And with commercials filling 20 minutes of every televised hour, she adds, "No wonder we all suffer from 'the wants.'"
When real-life 20- and 30-somethings dream of home ownership, they can face daunting odds -- and the temptation to overextend themselves.
"They're introduced to products that make for dangerous borrowing," Yochim says. These include interest-only loans and 0%-down mortgages. "The lending industry has said home ownership -- the American Dream -- is not out of your reach, and we can make it work. They do make it work -- for them, for the bank."
A need for change
As Draut looks at young people trying to build their lives, she sees a political system that has failed to address major changes, such as the increased need for a college education. "Instead of putting more resources into helping people pay and making sure they get through college, we've made it more difficult for students to finance education than 30 years ago," she says. She proposes shifting federal college aid away from loans to grants.
Another major issue involves the high cost of rearing children. Family experts say the United States is alone among developed countries in not providing either paid family leave for parents when they have a new child, or affordable child care.
Even an Ivy League education is no guarantee of instant financial stability. Jeffrey McDaniel graduated from Dartmouth and his wife, Meghan, from Smith. But in 2002, as they began paying her graduate school tuition and their wedding bills, they did considerable belt-tightening.
"We ate on $10 to $15 a week," says McDaniel, a fundraiser. They lived in a $590-a-month unair-conditioned apartment on a trolley line in West Philadelphia, battling roaches and mice. After she earned her master's degree and began working full time, they moved to a better area and continued paying off debts.
On Dec. 30, their frugality paid off. "We hit a zero balance on every credit card," he says. "That was quite a celebration for my wife and me."
Draut and her husband no longer have to sell CDs to raise cash. But she says she is "still chipping away" at school debts.
For others in this generation, Yochim suggests finding ways to improve incomes. That might include taking a temporary second job, taking in a renter, keeping a car longer, or using public transportation.
She urges young adults to contribute to a 401(k) program, calling their nonparticipation "alarming." Noting that an employer's matching funds are free money, she adds, "Always take the freebies."
And check credit reports. "Your college grades might not follow you for life, but your credit report does," Yochim says. "Your youthful indiscretions are going to follow you around for seven years, or longer."
Draut chides her peers for their lack of interest in the news and their noninvolvement in politics. "They don't connect their personal financial problems to the larger issues in the economy and to the political system," she says. "It's time we change that."
She also challenges young people to start reading newspapers, either in print or online. "Politicians don't pay attention to them because they don't vote. Young people need to weigh in on issues being debated by elected officials. And vote. When it comes to this generation trying to exercise some political muscle, a 50% generational turnout isn't going to get the job done."
By Marilyn Gardner, Christian Science Monitor staff writer
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MSN Money's editorial goal is to provide a forum for personal finance and investment ideas. Our articles, columns, message board posts and other features should not be construed as investment advice, nor does their appearance imply an endorsement by Microsoft of any specific security or trading strategy. An investor's best course of action must be based on individual circumstances.
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