When my Gen-Z sons were younger, I lectured them about how credit cards are evil. I encouraged them to open Roth IRA accounts as soon as they had earned income.
But after living through the recession, I have started to re-think some of the personal finance advice I assumed would be best for my sons.
I realized some advice becomes outdated and no longer relevant depending on the job and housing markets, overall economy and personal circumstances.
Getting a 4-year degree
I used to think my sons had to have bachelor's degrees right away before entering the workforce. However, after hearing about how many college graduates can't get jobs, I realized it's better to have a practical job skill. Sometimes the best route is to obtain an associate's degree in an in-demand profession, begin working and later finish a bachelor's and master's degree if desired.
As a Gen-X college student in the 1990s, counselors encouraged people to get a liberal arts degree. But few people have the luxury to spend tens of thousands of dollars on degrees that result in no jobs or jobs with limited income potential.
Saving too early for retirement
It would be ideal if everyone started saving for retirement as early as possible. However, it's not practical. My Gen-Z sons need money for their first apartments, first cars, car insurance, food and basic necessities. Putting money in a Roth IRA account isn't practical when they need to have immediate access to funds in order to stay out of debt. I rather they save money in a regular savings account until they have had a full-time career for at least one year. The exception, of course, is that they save any matching dollars that the company offers through a 401(k) plan.
Avoiding credit cards at all costs
Instead of discouraging my son in college to have no credit cards, I encourage to keep only a few. The key is to pay off the balance each month. Also, I suggest he never buys anything on his credit card unless he has the money in the bank. The goal is to build up credit so he will qualify for a home loan after he has a career. Since interest rates on homes have never been lower, he will probably do well to become a homeowner. Even if he decides against home ownership, his good credit score will come in handy if he wants to take out a 3-year car loan.
Assuming home ownership is best
Because interest rates are so low on homes, I always assumed my sons would want to purchase their own homes. However, after seeing how many problems people have had selling their houses, I no longer think home,ownership is always best. In fact, in many cases home ownership ties a person down to a particular location, preventing them from relocating for a better job or relationship. The value of our family home probably won't recover until 2023. My sons will need to write down a "pros" and "cons" list to decide whether it's better to buy or rent.
As a parent, I want my sons to be financially successful so they will have more choices in life. Now I know what may have worked for my Generation-X won't necessarily work for Gen-Z.
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