My generation has seen a great many changes, primarily for the best. Yep, here comes the but ...
I am concerned about how much emphasis we have placed on ease of payment and none on "do we need this item" that is so easy to purchase. Every generation has a different set of circumstances acting on their growth and development. In my case, my parents were toddlers at the start of the Dust Bowl (mom remembered Black Monday as a three year old) and the Great Depression. So I was brought up by fiscally cautious parents who were careful savers and investors.
Values
I was raised to "show up fifteen minutes early for work," and "figure out what they need before they ask for it," or "Money doesn't grow on trees!" and "If you want it, but you don't need it, you can live without it," and everyone's favorite "If you're hungry, you'll eat!" Education, knowledge, and common sense were the hallmark values of our clan - for the most part.
When you had to pull out your wallet and count out the bills and change for your purchase "do I need this" was ever present. Now, my folks may have been a bit too focused on each penny, but they weren't cheep. They made donations to campaigns and non-profits. We had vacations twice a year - one hotel room on the road, picnic lunches at state and national parks, and staying with relatives - no cruises, amusement parks, or resorts. But more importantly, they were set for retirement and long-term care. My mother had Alzheimer's and needed special care the last seven months of her life. At one point the bill was 20k a month.
Concerns
My biggest concern for the current set of young consumers are these easy to use services with monthly fees and quick purchases of $1 - $10 off of websites or for convenience food.
Let's look at some figures - note: these were calculated on www.savingscalculator.com with an interest rate of 2.37 APY% (annual percentage yield) and are for reference purposes only.
It's easy to drop $10.00 on lunch, a weeks worth of coffee stops, snacks, etc. If you took that same $10.00 and added $10.00 a month to a savings account for 20 years you would end up with:
Total Deposit: $2,410.00
Interest Earned: $672.03
Savings Before Taxes: $3,082.03
Personal Income Tax: $168.01
Savings After Income Tax: $2,914.02
Spending Power of Your Savings: $1,811.08
Okay, that doesn't seem like so much compared to the enjoyment of the lunch. But let's kick it up a notch. Let's look at giving up 10 lunches a month or brewing some coffee at work and start with $100.00 and add $100.00 a month:
Total Deposit: $24,100.00
Interest Earned: $6,720.03
Savings Before Taxes: $30,820.31
Personal Income Tax: $1,680.08
Savings After Income Tax: $29,140.23
Spending Power of Your Savings: $18,110.80
That should get your attention. If you put aside $100.00 a month and pack a PB&J ten times a month or walk around your neighborhood instead of a gym membership, you'll have 29k in 20 years. And note, that's one month of memory care for a physically and mentally disabled elder with full-time memory care.
Take it a step further, when you get a bonus or a raise, park half that amount in your monthly savings. Spend some, but save some. Also, you can be your own bank when the unexpected arrives and take a loan against the principal in your account.
Challenge!
Take a look at your spending habits and see where you can carve out $10, $50, $100 a month to start your own savings account. It's not as hard a you think.
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