File this one in the "sad but true" category.
Washington Post writer Alexandra Petri's recent piece on the "10 things they really don't tell you at graduation" offered a lot of great points, but one in particular merits serious consideration: "You have no idea how personal finance works."
As Petri notes, we Millenials fare poorly on financial literacy tests and are at a loss about what to do with the little money we have: "Save it? Spend it? Invest it in something that will accrue in value over time, like ironic wall-paintings of Michael Jackson?"
My guess is that this line evoked a combination of laugh and whimper from the thousands of readers who shared the article on Facebook. But poking fun at our money problems – even if it offers a cathartic release – glosses over a fact that too few Millenials take to heart: We are thoroughly screwed unless we learn how to manage our money.
Granted, the same could be said for members of other generations, but a couple of economic trends have placed Millenials at a uniquely high risk of financial ruin.
First, we came of age in a bubble economy. Many in the vanguard of the Millennial generation – those born in the early 1980s – bought homes at the height of the housing boom only to see the value of their properties vanish overnight. Also, the cost of college has outpaced inflation for decades, resulting in eye-popping tuitions that would have seemed unfathomable to an earlier generation of students.
Second, we grew up in a society whose debt tolerance was unprecedentedly high. The eagerness with which banks sold bad mortgages in the mid-2000s has become the stuff of economic lore, and government guarantees make it startlingly easy for a college-bound 17-year-old to dive six-figures deep into a pile of unsecured student loan debt.
As depressing as these circumstances are, the helpless way in which most Millenials respond to them is yet more distressing. Namely, we beg for someone else to come in and fix our problems.
Hope springs eternal at online petition sites, on which droves of signers implore the federal government to forgive their student loan debt. In my view, a Congress that can barely muster the will to pay its own debts is unlikely to forgive ours. Vague lamentations of greed in the financial services industry will – I think – prove similarly futile in improving the lives of the debt-burdened masses.
The truth is that if we are serious about achieving financial security – and we should be – we'll have to do it ourselves. That means paying off debt (check out Dave Ramsey's excellent method to do so here), earning extra income (the book The Education of Millionaires will tell you how) and investing for our future (learn how to start at Kiplingers Personal Finance).
The tools are there. The question is whether we have the will to take control over our financial situations, and I happen to think we do. Millenials have adopted an admirable DIY ethic in many areas of our lives: We build our own bikes, brew our own beer, and even jailbreak our smartphones to make them work the way we want.
At every turn, we reject the default, assembly-line option in favor of the choice that works for us. Make no mistake: the default financial option – one that many if not most Americans heedlessly accept – is one of anxiety, constant debt, and fiscal stagnation. It's time we cast aside the norm in favor of a customized strategy that will allow us to work not for our creditors, but for our communities and ourselves.