By Rob and Arielle Densen August 1, 2004- A few years back, a public opinion poll I worked on while with OppenheimerFunds found that most single women in their 20s and 30s expect to acquire 30 pairs of shoes before accumulating $30,000 in retirement savings. I was appalled. The young women in my department were appalled, too--by my reaction. As one expressed it, "Like, duh, what did you expect to find?" We got tons of publicity, of course. Lots of pictures of women with piles of shoes. It all seemed so amusing, that is until you stopped to consider that millions of young Americans are Manolo-Blahniking and latte-slurping their way into financial oblivion. The benefits of early adoption of savings and investing behaviors are huge. It's probably the single most important thing individuals can do to secure their later years. Assuming an 8% return, if you start saving for retirement at 21, you need to save only half as much as if you start at 35. Yet young people aren't getting this most critical message--in large part because no one is delivering it. For perspective on this disturbing problem, I went to the source--Arielle Densen, a junior at Washington University with a double major in Business and English and a minor in outlet malls. So, Ari, how many pairs of shoes do you have anyway? A few less than Carrie Bradshaw but enough to say that I'm embarrassed. What else do you spend on? Eating out, plane tickets, and, occasionally, expensive clothing. Of course, now that you've made me feel guilty about downloading music, my expenses on CDs are way up. Any idea how much you are spending on these things? Nope. What about the money you spend on running shoes? I bet you have more sneakers than Foot Locker. Ever heard of "Terry Bradshaw Syndrome?" That's enough about me. What's your approach to spending? Ever since I got my first paycheck, I've been partaking of the wrong "S" word--splurging instead of saving. When everyone around you is spending, it's hard not to. For now, my goal is to spend only what I earn. If that fails, to spend only as much as you will give me (just kidding). Is this attitude pretty typical, and does it vary by gender? College kids are consumers. Women tend to be extravagant, whether or not they can afford to be. Guys may spend slightly less, but it all evens out because guys leave money in their jeans when they do the wash. Does anyone encourage you to save and invest your money? Not really. The focus is on spending. I've lost count of the number of credit card applications that are sent to me at school. I get them at home, too. It's nice to feel wanted. What do you know about investing? I'm a business major, and my father worked in the mutual fund business for 15 years, but I still can't tell you the first thing about investing. Nothing? What does S&P stand for? Smile and pose? I do see your point. What about school? What have you learned about investing? It's certainly not part of the curriculum there. College is all about accumulating knowledge. The part about accumulating wealth comes later, apparently. No one on college campuses is encouraging students to invest. Still, every student is going to receive a paycheck someday. Managing it shouldn't come as a big surprise. So who is responsible for the financial hole that your generation is in and the fact that you'll probably have to work until you're 90? After many years of therapy, it will turn out to be all your fault, but in the meantime, there is plenty of blame to go around. What is it you always say about errors of commission and omission? Parents, college, employers, government, credit card companies, the media, fund companies. No one out there is encouraging kids to save; on the contrary, you can't get away from the spend message. It's time for someone to step up. Any last words? Dad, are we getting paid for this? |
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