I admit that I had some pretty big dreams in high school also. I wanted to go to college, graduate, work in a prestigious position and make around $50,000 a year right out of the gate. Of course, reality eventually took hold. Two years out of college and I'm making far less, less even than the national average of $45k annually for recent grads. There always has to be someone at the low end of the curve, and it just so happens I'm among them.
So you can imagine my amusement when I discovered that high school kids these days expect to be making $144,100 a year! (source, MSN)
Potential sources of this staggering income included doctors, IT professionals, and teachers. The article goes on to theorize that this inflated "ego" leads them to make poor financial choices, take on more student loans and credit card debt than they can realistically handle after graduation.
Is it surprising, however, that they are overspending on everything else as well? Is it surprising when our schools have sold out our kids to advertisers and allowed them to be masterfully manipulated into mindless consumers? A complete lack of financial education and ignorance of credit and financial institutions can certainly contribute to their abuse of credit cards.
Kids are being raised by debt-loaded parents with all the pricey stuff (thanks to frequent home equity refinances and tapping in to an inflated market to buy material goods) and no clue of how much their parents actually make. A recent Dave Ramsey airing talked about discussing finances with children, and he agreed that most parents do not tell their kids how much they make and believed it was none of their business. I don't entirely agree, because one thing that does is create perspective.
The article puts some blame on the media and society. Of course its our fault! We have no problem allowing aggressive advertisers full access to our children so long as they shell out the cash for a nice stadium scoreboard. No wonder they overspend.
The credit industry allows people to overspend; the article gives the example of cars. Absolutely. I read about a woman with a $40k income who was given a $40k car loan! A woman at a bus stop the other day was talking on her cell phone about her work (I deduced she was a secretary) and was raving about the $30,000 car she was planning to buy (quite a step up from riding the bus). She must be the supervising secretary of Exxon!
It then gives the best advice I can think of: communicate with your kids. Help them establish that perspective they are lacking, to be more critical of the goods they buy and the ads they see, and to become smart, efficient consumers. Talk about long term goals such as retirement, having a savings fund, how to avoid debt and how credit cards, mortgages, and other loans work.
Monday, June 11, 2007
What are we teaching kids about the value of their work?
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3 comments:
I wasn't sure about going to college in high school because I started a business and felt school was holding back my entrepreneurial drive. Waited until my senior year of high school and decided it would be to my advantage to invest my money (had about 18k at the time) in myself rather than open up shop. A 19 year old doesn't always have things figured out, and in the end I'm glad I got my degree. Being my own boss one day is still an itch on the back of my neck though.
When I was in college I had that chip on my shoulder that I would make a ton of money going into IT. Money is here, but when you are just getting started it takes time to get to where I would like to make. My credit card and student loan debt levels did not feel like a huge deal at the time, but I am now paying for those choices. In college it was all on me to pay for because my parents don't understand the value of college, they only see how much it costs. I got through college riding credit and student loans along the way because I didn't have much of any income to speak of.
Now that I woke up to the reality of what this work/money/life thing works, I'm trying to change directions. Using credit is different than needing credit, so if I completely remove the need for it, there is no reason to use it period. We all have to make our mistakes and learn from them, but debt is one of those things I never want my children to face. I don't think children should know all of their parent’s financial situations, it is not their business. They see what parents do and mimic those actions, (good and bad) so teaching them that the principles of saving and spending money, paying for stuff, and not using credit to do it is more important. Kids will gain more value by learning that work gets them money which lets them buy things. If they don't have enough money to buy something, they must save their money in order to have it. I just hope my wife keeps on board with this idea.
I was taught that you have to start at the bottom and work your way to the top. There are no shortcuts.
Given the rate of failure for new startup businesses and the lack of experience of a high school student, I'd say you made an A+ decision.
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