You still need to
know your numbers—how much you make, how much you owe and how much you spend.
After confronting the numbers, determine reasonable goals and rewards: if you’re not buying a house right away, perhaps you’re contributing to an investing goal or savings account instead. Set aside a small amount of money every month. You can automate a monthly deposit and account for that in your budget so you don’t “miss” the money and feel crunched on cash.
From there, maybe you drop your savings in a high-interest savings account, or do your research and explore the world of investing. The cost of putting money to work in the stock market is lower than ever, especially if you keep it simple and invest in something like a low-fee S&P 500 index fund.
Retirement savings may not be a physical asset like a house or a car, but that pile of money is ultimately the most important financial goal to keep on your list. If you’re lucky enough to work for an employer that offers a 401(k) match, take advantage of it. If you don’t have a 401(k), consider a Roth IRA, which will allow you to take money out for emergency expenses, and a health-savings account, which will help you escape tax penalties, should you need to withdraw for a medical expense.
A savings account, a 401(k) or a health-savings account aren’t tangible in the same way as a house, but they’re plus marks in your asset column. And if you feel like you have something going right, if you’re contributing in some small way to your future, you’ll feel less helpless in the long run.
There’s one more thing: Within reason, allow yourself some small joys. There’s a difference between someone who saves some money and enjoys themselves occasionally and one who saves nothing and splurges on brunch every day. When you’re feeling less helpless about your financial health, you can feel good about putting money toward the things that make life worth living.
The goal-setting isn’t just important for young adults to understand, though; it’s important for their parents to get it, too. A more realistic, empathetic conversation between the generations can also lead to more conversations about money, period.
Ms. Weeks knows her parents meant well when they told her college debt was “good debt,” and they also weren’t the only ones to dole out this mistaken advice.
“As you get older, you learn your parents are fallible,” she says. “I wish they’d been more upfront about how hard it was, because it feels like a moral failure when you can’t reach these milestones.”
In Which I Follow My Own Advice
I applied this advice to my own life on a recent drive with my parents back home. I knew I wanted to talk with them about how they’d seemingly so easily reached these huge goals.
When they were 28, my parents were already married, with a kid and a house. At the same age, after a series of too-many-roommates scenarios, I now split rent with my girlfriend, and we’re both on the same page when it comes to spending money. We budget together every month and we share a credit card, mostly for the convenience, but also for the points. One day, we want to own a home, but for now, we’re just trying to save what we can without sacrificing the occasional dinner out. After seeing our friends drop thousands of dollars on weddings, we’ve agreed a big party like that isn’t in the cards right now.
Less Powerful Paychecks
When adjusted for inflation, overall wage stagnation has decreased purchasing power for many young Americans.
Median annual income among those 25 to 34 years old
Note: Values in 2018 dollars and include full-time wage and salary workers
Source: Bureau of Labor Statistics
I’ve had to redefine so many of my goals. Home ownership, as much as I dream about it, just isn’t a viable option for me right now, and like Ms. Behr suggested, I don’t know if it would make the best use of my savings, either. Instead, I do what I can: I have taken advantage of every 401(k) match offered (in my first job, that was just 1%, but I was so excited) and I contribute every month to my savings and investing accounts. I want to learn more about investing and I still dream of buying a little house with a wide window seat, just like the ones I bookmark on Zillow. But for the time being, I feel comfortable just setting aside what I can.
And as my dad told me, he and my mother didn’t start “paying themselves” until much later in their marriage. Before then, they were too busy putting money toward their mortgage, their credit card bills and their childcare costs. He said back then they simply didn’t have the cash to stash in a savings account. In that way, I’m already ahead of where they were at my age—just not in a way I expected to be.
The last time I visited my parents, we talked about my own goals. I want to go to graduate school one day, but I’m afraid of taking on that much debt. I still want to buy a home, but a down payment feels incredibly elusive to me. My parents, to their credit, tried to understand.
They bought their first home in the 1980s: a one-bedroom starter home in Decatur, Ga. With some help from my grandfather, they came up with $10,000 for their first down payment (around $22,200 in today’s dollars).
“You know, nowadays 10% isn’t enough,” I told my mother, reminding her of how she and my dad afforded their first house. Lending practices have changed. “A lot of times, you have to have 20% already saved for your down payment.”
She was shocked. “Who can save up 20% for a down payment?”
—Rachel Feintzeig, Laura Kusisto and Josh Mitchell contributed to this article.
Write to Julia Carpenter at Julia.Carpenter@wsj.com
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