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I’m glad I’m not the only one who has noticed that there’s something wrong with our spending habits.

Bad news on savings

Now when will the people doing the spending start paying attention?

My office is in the same building as a psychologist’s office so I’ll occasionally pass by a patient in the hall on the way to the shared bathroom. I recently overheard a teenage boy on the way in with his Mother express his insecurity about their up coming appointment. The brief exchange got me thinking about what is really important that a teenager know and that a parent know. Following some brainstorming I came up with the list of questions I would ask a teenager to make sure he or she is on the ball. The answers don’t matter because a teenager is going to do whatever they want regardless. The questions ate probative and are intended first to make them think and second to open the door to dialog with their parents.

* Do you exercise? Ride a bike? Skateboard? Rollerblade? Wear a helmet?
* Do you smoke? Do drugs?
* Are you having sex? Is it monogamous? Are you being safe?
* Do you express yourself creatively?
* Are you happy with your life?
* Do you respect your parents?
* What’s the most urgent thing about them you would want to change?
* What’s the most important thing to them about you that they would want to change?
* Do you study? Do your homework?
* How often do you think about these questions?

This is an elaboration of what my dad calls the high five - the five things that matter - questions to ask first thing in the morning:

* Did you wake up (duh) and are you healthy?
* Is your significant other awake and healthy?
* Are your kids (family) awake and healthy?
* Will there be food on the table tonight?
* Did you pay the rent or mortgage?

If you answer yes to all five, you’re ready to start the day knowing that everything else is a trifle. I’ll follow up sometime with questions to help transition from the first set to the second (i.e. questions for a young adult).

“A chicken in every pot and a car in every garage.”
-Herbert Hoover

I started a post to rant about fiscal irresponsibility among generations X and Y - both the new parents and the DINKS (Dual Income No Kids) but got lost focusing in on a point. It’s not an easy argument to assemble which perhaps is why so many of our generation have failed to set reasonable personal policies for managing their money. Reading a Yahoo/Forbes special article onBuying the American Dream I realized the prevalence of foolish beliefs that there’s nothing wrong with living to the limit (or even beyond) of one’s means. We seem to have reach a point where we don’t think twice before spending every last dime of our personal incoming. We have come to expect the griefs of living month to month as simply the cost of living wherever it is that we’ve made our home when in fact we’re neglecting to make the difficult decisions, to muster the will power it takes to save or to think more than a month in advance. While much of this can be blamed on the atmosphere fostered by society - from the media’s focus on glamorous lifestyles to credit companies irresponsible lending - at the end of the day it’s our debt. And there’s a lot of debt on our hands. The advice is simple (limit spending, pay down debt, save and invest) but we seem to come up short on the follow through. It’s time we realize that even a million dollars isn’t what it used to be and you shouldn’t be spending your savings on a vacation home or a second luxury car when you’re both working full time to bring in $200k. To highlight the level of absurdity we’ve reached consider that the ideal breakdown of income for a new family is 30% long term debt (usually a house) 30% spending 30% savings and 10% for a rainy day while in reality we’re spending upwards of 50% on debt (some not so well leveraged) and most of there remainder on what used to qualify as luxury, saving less than 1%, including for that rainy day. When the storm hits (not if) we’re going to be in trouble.