An Interview with Golbguru (Money, Matter, and More Musings), Stephanie (Poorer Than You) and the English Major (An English Major’s Money)
( This interview is a part of the Ethics, Values & Personal Finance Week. )
And now it’s time to introduce the brightest shining stars of the young and fabulous personal finance bloggers. My first guest, Golbguru runs the blog Money, Matter and More Musings, my second guest Stephanie runs the blog Poorer Than You and my third guest the English Major runs the blog An English Major’s Money. Money, Matter, and More Musings (known to some of you as The Tao of Making Money) is one of the very few finance blogs by a student that is listed among the top 30 blogs based on number of RSS subscribers and top 100 based on del.icio.us bookmarks, indicating its huge popularity. Poorer than you is one of the few finance blogs that has been mentioned in main stream media, New York Times – no less! An English Major's Money is highlighted this week as the blog of the week on the prominent personal finance blog All Financial Matters. Golbguru is currently a Ph.D student. Stephanie had to drop out of film school due to financial problems. The English Major is a recent grad. Who better to discuss issues related to Ethics, Personal Finance and the Youth than these amazing people? So, let’s get started!
ISPF: When the younger generation is just starting out to be financially independent, how much support do you think they can expect from their parents? Is it unfair to the parents if their children continue to depend on them? Or do the parents expect it from us to seek their help? Any other opinions?
- The way I have been brought up, I see it as a moral responsibility of every parent to do the best for their kid (financially) as he/she steps out in the real world. The children on their part should understand the financial limitations of their parents, and adjust their expectations accordingly (I am assuming that the children are pretty much grown up and thoughtful by the time they think about becoming financially independent). A decent financial push in the beginning could prevent a lot of tensions (financial and psychological) between the parents and kids in time to come. Once you help your children with all your heart...it is very likely that your children will help your grandchildren with the same attitude.
- I don't think it's unfair to depend on your parents for a *reasonable* time...however prolonged dependency is not in the interest of neither the parents nor the children.
- Also, there might be some cultural issues in whether "parents expect it from us to seek their help". Personally, I would expect my children asking for help at some point or other. If they don't need any help, it 's even better, but I would be prepare for the worst. If your money can't help your children at their time of need....I don't know what you are saving it for.
Stephanie: It's a strange situation for me. Since I'm not at school right now, I'm back to living at home and relying partially on my mother for support while I get back on my feet. But I don't expect much from her, and I do consider this an extreme circumstance. I don't think parents should be supporting their adult children more than necessary, however. I have a friend who's going to be 21 next month, and her mother gives her a $150 monthly allowance still. That doesn't make any sense to me. The first few years out of the gate, if a child needs some help with the necessities, then they should be able to go to their parents. But I don't think parents should be providing "fun" money anymore.
English Major: I think that most young people can tell how much financial support will be forthcoming from their parents by how they have interacted with their parents about money in the past, especially during college. My parents expect me to need their help a bit in the early years of my post-college life, but they expect me to be responsible with the help they provide. I don't think there's one way of interacting with your parents around money that's right and other ways that are wrong, but I do think it's important.
ISPF: The cost of education is soaring. One of you is still a student (Golbguru), one had to dropout due to financial issues (Stephanie) and one of you recently graduated (English Major). Do you think the cost of education is still worth it? What advice would you give, based on your current experiences, to those who are considering going to college?
-Whether education is worth the cost depends on your choice of school and your field of study. With a proper choice of schools most higher degrees will be worth the efforts/money. Sometimes the worth is not determined by just the monetary value of education...it depends more on your career objectives (and money is just one of many other career objectives).
-For those who are considering going to college, I just have one message: WORK HARD. Good grades often translate into better financial support and that may effectively means free education....and zero student loans. That will really make the education worth it.
Stephanie: I'm still trying to reconcile in my own head whether my first two years of school were worth the cost. The thing I keep coming back to is that I couldn't have done it any other way. I wouldn't have known film wasn't for me if I hadn't gone for it. Two years at a state school wouldn't have saved me any money - I still would have had to have taken four years of film school after that. Part of me wishes I had crunched the numbers and spent a year working before going off to school. The problem with that idea is that financial aid would have taken all of that money the first year of school. The best thing to do is try and get more scholarships.
English Major: This is hard for me to answer. My first inclination is to say yes, yes, yes, a good education is always worth the cost, but I know that for many people, the cost of college is truly prohibitive. Especially for people who can get the places they want to be without a degree (or with a degree from a less expensive institution), I guess I would advise carefully considering whether an expensive college is right for you, but for people who really want to be at school because they love their course of study and enjoy what my college's promotional material calls "the life of the mind"...I think for those people, the benefits they reap from a good education are worth taking on debt (I say this chiefly based on personal experience with a couple of friends who've made really profound sacrifices to be able to pursue somewhat esoteric studies). My best advice is not to rule things out prematurely--apply to the schools you want to go to, see how much financial aid they can give you, see how much independent scholarship money you can pick up, and keep trying to make it work out.
ISPF: Peer pressure makes a lot of the younger generation spend a heck of a lot more than they can afford to. What guides you to stay within your means? Where do you draw the strength from, to resist the peer pressure?
-The key is in how to smartly handle peer pressure. Be diplomatic. You don't need to say *NO* every time you are pressurized...just be smart and give in to *cheap* peer pressure opportunities and avoid the expensive ones. Sometimes it just takes some smart (or friendly) excuses to get out of peer pressure. All this is if things are within reasonable limits...if your friends start pushing you too much and refuse to understand your situation, it's probably time to choose a different set of people to get along with.
-I have some kind of a mental budget for splurging on stuff and if a certain activity with my friends is going to cost me more than that budget, I simply present some clever excuse to get out of that activity.
Stephanie: Shop alone! I certainly spent a lot of money in high school, when our main hangout spot was the mall. Even then I was the biggest tightwad in the group - I was notorious for being the only person who went to the mall every weekend and never bought anything. But there was still the cost of going to the movies, chipping in for gas, whatever. I wish I had learned earlier to suggest hanging out at places where we weren't tempted to spend money. We've had just as much fun playing board games in someone's living room as we used to at the mall. Removing yourself from the locations where you're likely to spend money is key.
English Major: I actually feel that my peer group has always used "peer pressure" to promote a sense of material moderation--for me, anyway, it's never been cool to have tons of flashy toys. I participate in that kind of culture by talking openly with my friends about money (and budgeting it, and stretching it, and not having very much of it) and actively (and openly) pursuing inexpensive social options. I recommend talking to your friends about money--I think it makes this kind of group frugality possible.
ISPF: One the one hand, being young is the best time to start planning for retirement since you have the full power of compounding on your side. On the other hand, youth only comes once, and if you don't enjoy life now, when else will you? How do you strike the balance between these two?
Golbguru: I don't have any set rules about *striking a balance* between spending now and planning for retirement. I just have one simple rule..save at least 20% of net monthly income. I enjoy life to the fullest with the remaining 80%. I plan on being consistent with that, irrespective of what salary I draw in future. I haven't decided on the real numbers, but some part of those savings will go towards a retirement plan (when I have one) and some will go towards major expenses like house and/or car in future.
Stephanie: It comes down to defining what you enjoy in life. I have expensive tastes for some things: video games, seeing movies at the theater, amusement parks and Renaissance festivals - all things that can cost a boatload. You have to pace these things throughout your year, and fill in the time gaps with lower cost fun. Also, I have a head for math. Simply knowing that the numbers point towards saving nags on my brain whenever I spent money.
English Major: I don't think I could really tell anyone else how much to give up for extra savings--I think the key is to set a goal and meet it. For me, it's totally unreasonable to say that I'll max out my 401(k) this year, but I can make it a goal to earn the full employer match. Just make a plan--know how much you want to save and put yourself on track to make it happen with automatic transfers. How small or large the goal is doesn't matter so much to me--what's important is having a plan, and having conscious reasons for having that plan, and executing that plan. I don't feel bad when I spend money that I plan to spend, even if I'm spending it on a movie, or a haircut, or drinks with friends--I budget so that I know how much I have available to spend on those things, and then I get to spend it without any guilt at all. Similarly, I don't feel deprived when I save money I plan to save--I feel like I'm doing something constructive. I don't feel like you have to have a real, visceral sense that retirement is right around the corner to start putting money away--I just do it for the sake of doing it, pretty much, and know that later I'll be glad that I did.
ISPF: This question is at the foundation of the Carnival of Ethics, Values and Personal Finance. I have asked this in previous interviews and each person's view is different. So, let me ask again to get the perspective of the youth. How do your personal values impact your everyday financial decisions?
Golbguru: It's not ethical if I lie here. :) In my case, I have observed that "ethics" and "values" are situation specific and I have different yardsticks for some of them when I am dealing with different financial circumstances. Sometimes, I tend to be judgmental about other people's financial ethics (which is not good, again for the same reason...the meaning of "ethics" and "values" is different for different people)..but I am working on it. :)
Stephanie: Where I spend my money is extremely important to me. I like to know what kind of business I'm funding by shopping there. This is why I boycott Wal-Mart, which treats its employees poorly, and why I shop at Wegmans (a local grocery store) which has been listed in the Top Ten Best Places to Work (in the whole country) for the past ten years. The ethics of a company matter to me. This is also why I only put ads on my site for products I personally use or recommend. I don't want to make money from companies I don't agree with any more than I want to give money to companies I don't agree with.
English Major: I think my values affect pretty much every financial choice I make. I realize that given the things I like and would consider doing with my life, the chances are that I'll never make a six-figure salary. For me, that makes it really important that I learn to spend consciously, save carefully, and live scrupulously within my means. All the small choices I make on a day-to-day basis contribute to my ability to choose a rewarding life, one in keeping with my personal values and beliefs, over a financially lucrative one.
You have to agree with me, that is one heck of an interview! :) I would like to thank Golbguru, Stephanie and the English Major very much for their candid, honest and well thought-out answers for what I believe are some very difficult questions! You can read more about what Golbguru has to say at Money, Matter, and More Musings or subscribe to his feed here. You can read more about what Stephanie has to say at Poorer Than You or subscribe to her feed here. You can read more about what the English Major has to say at An English Major’s Money or subscribe to her feed here.
And now I open the mike for discussion. Do you agree with our guests? Do you have anything to add? How would you answer the above questions?