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Generation X Money Crisis- Tips To “Grow Up”

November 9th, 2007 · 5 Comments

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Another day, another article about how Gen Xers can’t save money to save their lives. The headline from this particular MSNBC article is choice: “For Gen X, it’s time to grow up and get a broker” Seems almost 50% of Gen Xers have less than $5,000 in savings to their name. As many as 40 percent of Gen X women and 58 percent of men said they carried a credit card balance of $5,000 or more!!! And these are people who are 25-30 years away from retirement.

Sigh… Gen X, Gen X… you’re always proving Them They were right about us. Every time I see one of these articles I want to burn my Fugazi CDs and sell my old Atari 2600 on eBay.

Listen, people! It’s not that difficult. You’ve been to college (still paying it off) and you’re almost 40 (still not acting like it)! You can DO THIS! How do you lose weight? Don’t eat so much. How do you save money? Don’t spend so much.

After the break, I’ve compiled some quick tips for righting your finances… they’re so simple even a Slacker could understand them.

Start Saving!

Rule 1: Start saving. Do it today. Do it this month. But do it every month for the rest of your life. Even if it’s only $20… $50 a month. Any amount of money set aside is something.

Best case scenario: you have a 401k plan with your employer.

Bester case scenario: your employer matches your contributions up to a certain amount. Free money people! I know you’ve heard it before! You’ve all learned how to calculate pot odds in No Limit Hold’em… you KNOW what free money means. If you lack the discipline to put the money in yourself, contact HR and have them take out a certain amount from each paycheck. You won’t notice it’s gone and it goes into your 401k PRE TAX.

Any scenario: Get a brokerage account somewhere. Open an IRA, Roth or otherwise.

AT LEAST: Go to INGDirect. Open a savings account. No minimums. No fees. Pays over 4% interest every month for doing basically nothing. Done with a click of the mouse. Then set it up to make automatic deposits every month from your checking account.

The above is the bare minimum you need to do. But the truth is, to really set yourself on the road to retirement, you need to do more. Here’s the sobering truth from the MSNBC article:

“Pay yourself first,” Charney said. He advises people to set aside at least 15 percent of their income into a retirement account. If that’s too much, people should start small with maybe 4 percent or 5 percent and gradually increase the contribution as they get pay raises.

“If you don’t save 10 percent of your income, you won’t be able to maintain the lifestyle you’re used to,” Charney said. For many people, that equates to saving about $2 million by retirement, after accounting for inflation. Those who haven’t put away enough money may have to work into their 70s.

No Credit Card Debt!

Step Two: eliminate all your credit card debt. As soon as possible. I spoke about free money above. Credit card debt is STUPID MONEY. It’s the stupid tax you pay for not living within your means.

Credit card debt is about the highest interest you can pay. Given the choice, you would NEVER pay percentages that high. It is entirely possible to go your entire life and never run a balance on your credit cards. Millions of people do it every day. The math is simple: if you charge $200 on a card this month, pay off that $200 when the bill comes. All of it. Leave no balance. If you pay off the balance every month, they never get to charge you a dime extra.

First, pay it all off. Pay and pay until it’s gone. Then make a pledge never to run a balance again. Use your credit cards like you use your debit cards: only charge what you can afford to pay.

Here’s an excellent article from SmartMoney Magazine. It goes into much greater detail about how to go debt free. Completely. Stop paying the stupid tax.

Rinse and Repeat

Here are some more tips. From the website Gather:

  • BUYING A HOME- Have part of your paycheck or bank account balance automatically deposited into an investment account for a down payment each month.
  • COLLEGE- Look into 529 plans for college savings for your child.
  • RETIREMENT- Consider contributing at least enough to your 401(K) to maximize any company match.
  • Saving such windfalls can give a significant boost to your financial health and help you reach your long- and short-term goals.
  • EMERGENCY FUNDS- Aim for at least three months’ expenses in stable, liquid vehicles such as money market instruments.

And some excellent blog posts:

Gen X Millionare- How much do I really need to save? How to eliminate debt in bursts

WiseBread- Six Steps To Eliminate Your Debt Painlessly

Aaaaand… a hat tip to Modite, who’s post on Gen X got my blogging around on this Gen X tangent

Related posts:

  1. When NOT to Put Money in Your 401k

Tags: Finance

  • Rebecca Thorman

    Happy to provide some inspiration for such a great post! I love reading financial tips, and even though I’m “Gen Y,” I found a lot of value in what you said. ;)

  • Brian

    Thanks! I love your blog, by the way. I love blogs from bloggers who have great personalities they let shine through.

    I think this post could apply to Gen X or Gen Y. You and I are probably only about 5 years apart in age or so. We’re both on the borderline. I get grouped in with slackers pushing 40 and you get grouped in with the 14 year old facebookers.

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    Good day!,