Said Brad Klontz, a financial psychologist, quoted in "The World’s a Mess. So They’ve Stopped Saving for Tomorrow. Many adults under 35 are throwing financial caution to the wind. It’s all about saving less, spending more and pursuing passions" (NYT).
May 14, 2022
"Every generation has had an apocalyptic view of their lives... We’re not wired to save.... We’re wired to consume."
"If you have an exciting vision of the future, those are the people who aggressively save for retirement. If you have an apocalyptic vision of the future, why would you save for it? Of course you wouldn’t."
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We're wired to [re]produce and recycle in moderation.
In other words, we’re wired to be flat broke when we retire.
Foolish but everything about this generation is foolish.
What is the point of saving when inflation is over 8% and investment returns are way below that?
And that works out great, until you live into old age. And until recently, the odds of living to old age were going up.
After 9/11 I heard many were buying expensive import cars in the Philadelphia area.
“Financial Psychologist”? There’s more money in being a financier who understands psychology — if you’re any good.
"Many adults under 35 are throwing financial caution to the wind. It’s all about saving less, spending more and pursuing passions"
and living with mom and dad.
"It’s all about saving less, spending more and pursuing passions ... "
Sounds like Congress and the US President.
Great...so now I get to pay higher taxes in the future to support them all.
I was JUST having this conversation with my youngest today - about paying yourself - your future self - first. Maxing out your 401(k) if you have one. Saving/investing the 2 extra paychecks you get per year if you work on salary and get paid every 2 weeks. For gosh sakes, having a budget and sticking to it.
He's the one of our three who least needs this advice - he was born frugal and a curmudgeon - but he's the one who's still a captive audience.
" ... We're not wired to save ... We're wired to consume."
I think somebody at NYT has their wires crossed.
Native Americans used several techniques to preserve their food, which enabled them to survive during winter months and fallow times of the year.
Techniques used by this ancient race were tried and tested and are relevant, viable, and still in use today.
The Homesteading Hippy
I don't recall behaving any differently when I was in my twenties, 40 years ago.
with inflation, any money saved depreciates: and even if you invest it.
And of course your interest is taxed too.
So too much money put into savings is a negative proposition.
And don't get me started on paying off the student loans of students who got egotistical degrees. That proposition makes a sucker out of everyone who didn't attend college because they didn't want to go into debt, or who paid off their loan, or who went to college via help from the military or Americorp.
Never fear. 30 years a free spirit, and then 30 years dependent on the kindness of strangers. Especially if you’re a woman. No family, no pension, but a whole lot of whining.
"What is the point of saving when inflation is over 8% and investment returns are way below that? "
I started work in 1979 as a new engineer with a good salary. I lived through the whole Carter inflation era and after paying off my student loans as quick as I could, I put the max in my 401k plus some more in 18% (at the time) CD's, and later, a bit in a strange company called Microsoft. To answer the question, if everyone else is broke, then the person who has any savings at all can live well, remember how low airline fares were in 2008? I bought a great used Rolex for nothing then, probably from a broke broker. Like the old joke about not needing to outrun the bear, you just need to have more than the profligate masses.
I left home at 19 and was self supporting but retirement was so far away it didn't seem real to me. By 40 I started to get it.
Then I managed to salvage things by working two jobs and saving like a beast. It can be done.
But I'm not big on travel or anything. My needs are few.
Very few animals plan for the future—because there’s no evolutionary incentive to do so. Humans are pretty extraordinary in that we have the mental capacity to overcome that deficiency and save for the future anyway. That’s why we’re not great at it—because we aren’t meant to be doing it at all.
Kids today are fed a steady diet of doom and gloom by activists who see personal benefit in getting others to think we’re all doomed. So they are less inclined to overcome that limitation and instead behave as nature intended—focussed on immediate gratification.
No generation saves when they're young. Among other reasons, it's because the people who run the schools don't teach people how to invest in the stock market. Leftists have no interest in the stock market, they're both ignorant and hostile to it.
The stock market is a blessing, and it's the only way for working class and middle class people to truly save for retirement. If you start investing in the stock market in your teens, or your twenties, and keep doing it, you'll be quite wealthy by your 60's.
I cannot tell you how many useless classes I had in geometry and algebra and other damn things that are only relevant to a small section of humanity. Learning how to make money is a skill set and it's fucking insane that it's not taught in high school.
I understand that geometry and algebra represent ancient knowledge, and the stock market is relatively new, but it's not that new. What the fuck, education establishment. Teach people how to invest!
The other thing is that investing in the stock market is fun and exciting. Holding on to cash? Boring. (And stupid with inflation so high). But investing and making money is exciting and fun.
Here are some free tips:
Buy Shopify
Buy Airbnb
10 Amazing Stocks Under $10
"Its all about saving less ..."
When your own government is devaluing every dollar you save what feels like a deliberate attempt to impoverish you, so that your savings is worth LESS in the future than it is worth NOW ... of course people aren't saving. That would be economically stupid.
With the internet, it is child abuse to not sit down once or twice a week, to cover money.
Time value of money specifically. With the internet you can model, countless savings patterns.
When young, money is always tight. Have to have new tires, broke collar bone, big tax bill. Week in Cabo. It is easy to delay of starve funding the 401K. Then promise to max out when you hit forty. Model that out with an amortization spread sheet. Even putting more total money is with the delayed contributions, you fall short of the constant contribution for the the same amount of time. You can play with different situations and create breakeven situations.
These are crazy easy concepts, just takes a little coaching.
Most of their passions are so shallow though. Casual hook ups. Smoking dope. Snorting a little coke to get you up from the dope so you can go out and buy $20 cocktails with your girlfriends or $20 craft beers with your guy friends. Journaling about your feels. A trip to Belize where you zip lined. A road trip out west or to Maine. Meh. Shine on you neurotic plastic bedazzle rhinestone.
Blogger JK Brown said..."And that works out great, until you live into old age."
I always looked at this question as a sort of Pascal's Wager. I saved. (funny how on the real Pascal's Wager, I came out the other way).
Brad Klontz, financial psychologist...
Obviously, a fakish qualification for making some fake claims about human nature. If under-35s are blowing their collective wad it's not because they're wired to be spendthrifts.
"Wired," what a stupid concept to apply to human behavior, implying our nature is as deterministic as the current in a circuit. Where did this "financial psychologist" get his education, from the back of a Froot Loops box? Even insects are more adaptable than that. The under-35s have been the prime consumer demographic since the end of the Second World war. Consequently, they have been the target of ever more sophisticated advertising campaigns for products and services designed by real behavioral psychologists. By and large, those multimedia ad campaigns are astonishingly effective and have grown more so with the growth of network technology. But they are hardly irresistible; under-35s may be as dumb as garden vegetables but they can apply reason to temper their urges, but it helps enormously if their parents had set examples of thirft and foresight for their kids to follow.
Gee, my most apocalyptic thought was that Social Security would go bust before I am eligible (jury’s still out on that).
That did not discourage saving.
Silly me, I thought everyone under 35 was burdened by outrageous student loan debt.
"In other words, we’re wired to be flat broke when we retire."
In a pre-technological world--the world in which we we evolved--people worked until they died, so you could say we're wired to be dead when we retire.
"Foolish but everything about this generation is foolish."
Said by every generation about all younger generations. It's a cliche favored by those who are scolds by nature, but it's also true: all generations are foolish, as humans ever are.
The most foolish of all are those who perceive their generation (or preceding ones) as being or having been less foolish than the newer generations coming into being.
Doesn't sound like anyone I know. Ok, whatever, enjoy your retirement when the world doesn't end.
Everything is new and inexplicable, to some people, who then make up the explanation most convenient to their purposes.
Financial attitudes reflect the stage of the longer-term cycle we're in. When bonds had outperformed stocks for a couple of decades following the crash of '29, then everyone responsible knew that bonds were a better long-term investment than stocks.
That was just about to change 180 degrees.
Similarly, attitudes in every sector today reflect, in some way, the Federal Reserve's 25 years of bubble-making. Some advertise the results they have supposedly gotten buying the most speculative stocks of all and holding them. Holding them and buying more any time they go down 20%, and more down 40-50%. Since the Fed immediately went to work blowing a new bubble every time the old one burst, holding the most speculative stocks through three bubbles should show tremendous results. TSLA.
So responsible financial authorities have all the data -- just like their grandfathers of the 1950s, except the results are reversed -- that proves holding stocks indefinitely is the best strategy. And members of the general public have learned that all financial problems get cured over time, no matter how badly they may look for a few quarters.
So why save? The government will forgive all student loans. Poof, that problem's solved! I'd be crazy to pay any of it down.
If I burn through my capital now, pursuing my true passion(s), so what, YOLO! And the next bull market will make me rich anyway, somehow.
It always does.
Proof of one of the biggest stock market tops in history. IMO.
Most generations don't have an apocalyptic view of the future. For my parents' generation the Apocalypse had already happened and nothing worse was on the horizon.
The historic human pattern was to have children who could support and take care of you in your old age. That's something we've largely lost in modern times.
When we lost it, we assumed that social security would make us secure in our old age, but we forgot that the underlying structure was the same: somebody's kids would have to pay into the system.
Pensions also gave us security, but those are gone. The replacement -- everyone who can becoming an investor -- has some good features, but also a downside.
Savings contribute to the economy, but also mask the fact that you still need a competent next generation to do the work.
Outsourcing the work doesn't help, and importing a workforce has disadvantages.
And not everybody is saving, or can save.
It's always humorous to me to hear Barry McGuire's song, Eve of Destruction.
I suppose Putin could send us into World War 3 tomorrow, so you could say he was just early with his doomsday scenario.
But the world is nice. It's a nice spring day. Play with your dog. Make love with your girl.
Was it a good idea to be miserable for 57 years?
Reminds me of the people who think it's awful to bring a baby into this world. It's wonderful to bring a baby into the world, you nitwit. Reproduction is good. Humanity is good. Cheer up.
(Dumbest lyrics of all time still go to the Beatles for Back in the USSR -- but at least the Beatles made happy music. In fact I'm inclined to think that the Beatles became famous because of how enthusiastic and happy they were as young men. It pays to be happy and optimistic, in my opinion).
Even squirrels try to plan for the future.
But the thirtysomethings will be OK once uncle Joe Biden cancels their student debt. They'll still be baristas, though.
Not much one can (should?) do for the young having this mindset. The fear of not having the wherewithal to live out one’s days free of financial worries, in relative comfort and, hopefully, still have enough left to leave one’s heirs something helpful did it for me. I can’t even imagine the feeling if the reverse were true.
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