Laura Alix
I’ve been meaning and meaning and meaning to write up a quick blog post on financial literacy. Today is still April, so I’m not too late. My sincerest apologies to every PR guy and gal who has patiently followed up with me week after week.
For starters, HarborOne Bank was kind enough to share with me its financial literacy agenda for April. The programs run the gamut from first-time homebuyer classes to household budgeting seminars to “Credit for Life” fairs at area high schools. Though I’ve never been able to budget the time in my work day to visit one, I’ve always liked the idea behind Credit for Life fairs, largely because they sound like a feasible solution to the tired refrain that “kids these days” graduate high school not knowing how to balance a checkbook.
In fairness, I didn’t actually have a checking account until I entered college, and my parents taught me to balance it in one simple 10-minute lesson. I often suspect the complaint about youngsters’ ignorance to the fine machinations of checkbook registers is actually a broader comment on younger generations’ financial illiteracy, so it’s nice to know that some financial institutions actually do something about it. I know HarborOne isn’t the only one in Massachusetts that undertakes initiatives like these, but I wouldn’t meet my deadline if I tried to name them all here.
On the personal front, The Warren Group (my employer and Banker & Tradesman’s publisher) recently brought in 401(k) advisors to have a chat with any interested employees about budgeting and sit with us individually for one-on-one talks about our own 401(k) plans. Initially nervous that I hadn’t properly diversified my own plan, the advisor assured me I was actually doing just fine, especially if I followed through on my plan to bump up my own contribution to 10 percent in June. I’m 30, so I still have plenty of time to save for retirement – although in this context, time literally is money.
Of course, it can be difficult to think about saving for retirement when you’re young and especially if you have student debt. I enrolled in a 401(k) as a sort of gift to myself after I turned 30. “I’m an adult now,” I affirmed (nervously and while avoiding eye contact with my own reflection). Once I did it, though, I felt stupid for not having done it sooner.
It’s easier to forgive myself for that hesitancy when I remember that for some years, I was also very nervous about my student loans from grad school. In the past 18 months, I’ve actually felt like I’m not just treading water, but actually doing reasonably well! (Yes, the exclamation point was necessary.)
Getting there required some sacrifice, but I’ve seldom had qualms about brown-bagging my lunch or walking around in slightly shabby clothing, and in any event, I’ve found these sacrifices pretty easy to make now, while I’m young, in good health and not yet “set in my ways.” Now I can realistically say that I plan to pay off the last of my student loans over the next two to three years, and I feel hopeful about the future.
Depressingly, a recent survey from Citizens Bank says that “most recent graduates with student loans underestimated their monthly payments and now expect to be making payments into their 40s.” Moreover, the survey found that many college grads under 35 are spending about 18 percent of their salaries on student loan payments.
Citizens Bank outlines the ways in which my peers have been coping with that debt burden. For instance, 54 percent have limited travel, 50 percent have limited spending on clothing and shoes, and 40 percent have limited their spending on rent or mortgage payments.
I know some Realtors may disagree with me, but I see it as no great tragedy that some of my fellow Millennials will rent for longer than previous generations did – especially those of us living in major cities like Boston.
However, I’m frankly annoyed that we don’t spend more time and energy encouraging Gen Y to set aside something – anything – for the day we inevitably will no longer work full-time. If you ask this Millennial, homeownership can wait, but saving for retirement? Hey, time is money.
