I graduated in 1987, in a roaring bull market when the only requirements for employment were a heartbeat and a clean drug test. You had to be a complete idiot not to get a job. None of my friends lived at home with their parents, even those who graduated with student loans.
Still, it’s tempting to downplay the role of luck in one’s life. I wrote one a few books It’s about money and what to do with it, and here’s what I’ve noticed: My generation (older Gen X and younger Baby Boomers) likes to assume their experience is universal.
Dear parents, you look at your young adult children and think: Why can’t you just do what we did? Work hard. Save your money. Buy a house.
You don’t want to accept that your child is having problems because of things that are out of their control and out of your control. The fact is that housing costs have increased dramatically. Inflation has exploded. Interest rates rose. Industries are now being transformed by artificial intelligence.
Young people, you complain: I was dealt a terrible hand.
You have the right to feel bad for about five minutes. Then you have to get rid of the pot of pity and deal with it. You cannot control mortgage interest rates. You can’t control inflation. Missed out on the real estate market in 2021 when interest rates were low? That sucks. Have you taken out a loan to finance your studies that isn’t paying off? This is frustrating. What now?
First, ignore your parents’ financial advice. And you mothers and fathers, if you are still with me: listen. I’ve spent decades thinking about money as a commodities trader, chief investment officer, certified financial planner and CBS News business analyst. Over that time the rules have changed dramatically. Your understanding of what you want your children to do with their money may be outdated for the world and economy in which we live. Allow me to give you a few examples.
“Buy a house as soon as you can afford it.”
I’m close to a couple in their 30s who live in New York City. They’re having a baby, make about $400,000 a year between them, and have been diligently saving hundreds of thousands of dollars.
They rent.
They can afford a down payment on a million-dollar home, but sinking $250,000 of their valuable savings into a home feels like a risk.
Her parents don’t understand. “You’re wasting your money,” they say. They are not.
Many of us are emotionally attached to the idea of home ownership and the feeling of stability it brings. But telling a 30-year-old in a city with a high cost of living to buy at any price is beyond today’s math. Just five years ago, the typical mortgage consumed about 30 percent of the average household income, which is just at the limit of affordability. Today it is around 42 percent.
The idea that renting is “throwing money away” ignores the fact that mortgage interest, property taxes, insurance and maintenance are all money you will never see again. Renting acquires flexibility, liquidity and freedom.
The American dream of owning a home didn’t come from heaven. It was largely a post-World War II creation aimed at men returning from war, fueled by government subsidies via the GI Bill, inexpensive housing, and an economy that no longer exists. Sticking with a model from 1945 makes little sense in 2026.
“Get a professional degree.”
A friend of mine has a son who worked as a consultant in his late 20s. He wasn’t at one of the most prestigious companies, but he liked his job and made good money.
At his parents’ urging, he took the Graduate Management Admission Test (GMAT), the ticket to MBA programs, and passed it with flying colors. Suddenly, Mom and Dad saw the University of Chicago or Stanford as his future. With a degree in business administration from one of the best universities, he could leave his medium-sized company, switch to private equity and accelerate his career.
But he didn’t want to.
“What are you worried about? We’ll pay for it,” they offered.
He was progressing quickly at work, had just moved in with his girlfriend, was making a good living, and couldn’t fathom the logic of taking two years out of the workforce to get a degree he wasn’t sure he needed.
For previous generations, an elite professional degree was a golden ticket. Today its value is far less clear. Employers are increasingly rewarding experience, judgment and performance via another line on the resume.
This young man’s parents were beside themselves. “Why are you wasting this opportunity?”
But just a year later, his career was blossoming right where he was. He became a bigger fish in a smaller pond, making more money and doing more interesting work. His parents thought another degree would be a safer choice. He understood that it was a safer choice for him to stay there.
He was right.
“Pay off all debts as quickly as possible.”
One day a friend’s daughter called me. “My mom is on my ass because I want to put money into my retirement account.”
She was young, had a good job, and had some student loans at a reasonable interest rate. She also had access to a company 401(k) plan with a generous employer match.
Her mother insisted that every free dollar must go primarily toward debt repayment. I understand it. Many of us have a neurotic fear of owing money, often fueled by bad experiences where high interest debt hindered progress. Baby boomers in particular were raised by parents traumatized by the Great Depression and were taught to loathe all debt.
If you don’t contribute to retirement savings with a match, that leaves free money on the table.
But not all debt deserves the same urgency. If you have a credit card balance with 22 percent interest, definitely pay it off. Immediately. However, a student loan at 5 percent or a car loan at 4 percent is a different matter, especially if your employer offers to match retirement contributions. It is pointless to reject this agreement in the name of “responsibility”. The reason is simple: If you don’t contribute to retirement savings with a match, free money is left on the table.
I told her: At least contribute enough to get the match. Let your money work for you. Make investing a habit. You can pay off debt and build wealth at the same time.
“Don’t waste money on fun”
That’s what really drives me crazy.
You’ll hear all sorts of “experts” telling young people that their avocado toast habit is stupid and wasteful. Don’t eat out. Don’t go to concerts. Don’t spend on anything that doesn’t “earn interest.”
I find that bizarre. No one really gets rich—or stays wealthy—because they skipped enough iced coffee. In fact, the “don’t waste money on fun” attitude leaves some people feeling deprived in the end. The idea that younger generations are struggling because of their discretionary spending is exaggerated. The real problems are high housing costs, rising prices after the pandemic and student loan burdens, all of which have risen faster than wages.
To be clear, I’m not saying you should be lax about your spending. But don’t turn your life into a punishment either because a centimillionaire on your Instagram feed finds your sandwich frivolous.
Check out mine new show, Money moves with Jill Schlesingerwhere I provide actionable financial advice without jargon or judgment.
https://www.thefp.com/p/forget-what-your-parents-told-you-about-money
