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Personal Financial Advice Young People DON’T Want To Hear

New York Times writer Damon Darlin wrote a great article called “More Advice Graduates Don’t Want to Hear.” It’s a follow up from an article he wrote last year at graduation time in which he suggested to young college graduates different ways to save money. The advice he gave didn’t settle well with many grads and they wrote Mr. Darlin complaining that his advice was impractical.

How impractical was Mr. Darlin’s advice? Let’s take a look at his money savings suggestions:

  • Diverting 10% of your income to savings and ignoring raises and putting them into savings as well. This is a corner stone principle of sound financial security. Verdict: Practical
  • Learn to cook. Eating out is expensive. You can save hundreds of dollars if you prepared your meals instead of eating out all the time. Verdict: Practical.
  • Never borrow money for a depreciating asset. Assets that depreciate are the majority of consumer goods like CDs, DVDs, and computers. I guess cars would go under assets that depreciate in value. Many people use credit to buy cars, but you don’t have to. Be like my grandpa: pay cash for your cars. Verdict: Practical
  • Cut the latte habit. The latte factor was made famous by David Back in The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich. The idea is that small purchases (like $4.00 lattes) if done daily, can add up to a huge chunk of change in a year. Save the money you would use to buy a soda or a latte and sock it away in a high yield savings account. Verdict: Practical

Damon Darlin’s New Advice

Damon Darlin felt that last year’s advice wasn’t sufficient and decided to add some more money savings tips. Let’s see if they’re impractical as well.

  • Find a partner and stay together. Being married rocks. You get to hang out with your best friend all the time. I’ve also found I’ve been able to live much more cheaply than I did when I was alone. If you get married, be in it to win it. Divorce is a very nasty and very expensive affair. Verdict: Practical
  • Start saving while you’re young. Not only will you take advantage of compounding interest, but by getting in the saving habit, you develop a lower rate of consumption. By having a lower rate of consumption, you’ll need less money when you retire. Verdict: Practical
  • Maximize workplace matching mechanisms. If your company has a 401k plan, and they’ll match your contribution by a percentage, then for the love of Pete, take advantage of it. It’s free money! Verdict: Practical

Final Verdict

All of Damon Darlin’s advice seems pretty practical. I don’t understand why anyone would feel it’s impractical. I guess it’s another sign of my generation being extremely whinny and refusing to grow up. All he’s suggesting is to delay your gratification and you’ll reap financial benefits later on in life.

Hat tip to my wonderful wife, Kate, for sending me the article.

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Featured Resources

It’s hard to teach kids about using Credit Cards wisely, and unfortunately most accrue high debts before they learn how to control Credit spending. But having a Visa Card at a relatively young age and using it responsibly can actually help establish good Credit for the future.

[tags]New York Times, personal finance, college, Damon Darlin[/tags]