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Somebody Save Me!

by Derek Sisterhen on July 26, 2010

If you could go back and talk to your teenage self, what would you say? I can think of a whole host of things. My guess is many of us would tell our teenage selves what to do differently.

“Don’t bother with that girl, she’s a heartbreaker…”

“Don’t ‘borrow’ mom and dad’s car without them knowing, you’ll get grounded for a month…”

What would you tell yourself about money? Maybe you’d impart some wisdom about credit cards, or mortgages, or how to buy furniture without financing it. Maybe you’d say you need to have a plan for your money.

Ultimately, I think we’d all agree that the most important lesson we’ve learned since growing out of that younger-looking body is that we should’ve saved more money. Even if it was just $20 here or $10 there; I have yet to meet someone upset by how much money they’ve saved.

I spoke to a group of 30 teenagers the other day on preparing for the financial responsibilities of life outside the nest. Did you know that if a 16-year old began saving $1,000 a year until she turned 21, that $6,000 would grow to nearly $550,000 at retirement age? If she puts that in a Roth IRA, that money is completely tax free. Why parents aren’t teaching their kids this simple, fundamental principle of wise financial management is beyond me.

I told the teenagers I met that the writing is on the wall – Social Security will be a shell of its current self when they retire. They understood that they are on their own for their retirement savings, but didn’t know where to begin.

So, if you could go back, what would you tell yourself? Is it any different than what you should be telling your kids right now?

  • http://youngluke.com/ Eddie Gichuhi

    I wonder if teenage kids understand social security. I don't understand it very well myself.

  • http://pastdueradio.com/ Derek Sisterhen

    That's a great point, Eddie. I actually asked the room of 30 kids if anyone understood how social security worked. Almost instantly, a girl (in the front row, go figure) raised her hand and proceeded to explain the way it's supposed to work and the current dilemma we face in the US. It was fantastic – they were very well aware of the problems with the system.

    The system is designed for us to pay into it – like an escrow account – during our working years, so we can then draw from it during our retirement years. However, the problem is that today's workers are supporting today's retirees. In the next decade, the number of retirees will outpace the number of workers, so there won't be enough money available to draw from when today's workers retire. And that is why the teenagers, Gen Yers, and Gen Xers are on their own for retirement.

  • http://bluecollarcoaching.net James Dibben

    I'm not sure the teen version of myself would survive the encounter.

  • http://pastdueradio.com/ Derek Sisterhen

    It was fun for me to imagine that conversation when I started writing this post! Mine would probably have to sit down and breathe into a bag for a little while.

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