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As a 20-something working in downtown Chicago in the 1980s, I spent every dime of my disposable income – and then some – on beer and Thai food, vacations, clothes, and parking tickets.
Fast forward 30 years, and my niece and nephew in Chicagoland are now graduating college. It’s liberating to leave school for a full-time job and a substantial increase in one’s income after years of penury. It’s also so tempting to squander this money.
But young adults no longer have that luxury.
The financial demands Millennials will face over their lifetimes are shaping up as far more complex than they were for their baby boomer parents, whose primary worry was buying a house.
Many young adults today have student loan payments and should, at minimum, save enough in a 401(k) to get their employer’s 401(k) match, which is essentially free money. Retirement will be a much greater challenge than it was for baby boomers, substantial numbers of whom have partial or full pensions, funded by their employers. Millennials work in a 401(k) world.
Graduates moving out of their parents’ houses for good also need furniture and may one day need a down payment for their own house to put the furniture in – and their children.
It’s critical to start planning and saving for these distant needs as soon as you snare a full-time job. More than half of Millenials in a recent Northwestern Mutual survey claim to be savers and not spenders.
Let’s hope this proves true, because this once-carefree blogger can confirm that everyone does get old. To paraphrase the music video above, put that money away.