Mar 10, 2009

No need to give up on the "American Dream"

I read an article today discussing whether or not the "American Dream" is dead. I think not.

The article doesn’t actually define the "American Dream," acknowledging that there isn’t one set definition. But it asserts that a key component is the idea that your children will have a better life than you do.

And I think that’s where a lot of us went wrong.

Our parents worked hard, and if yours were like mine, they gave you a pretty comfortable life.

I have to admit that when I graduated from college and had to take care of myself for the first time, I had a hard time downgrading my lifestyle. No one had actually told me it would happen, so it didn’t seem obvious at first that I could no longer have what I wanted, when I wanted it. It’s not that I thought I should be able to afford a fancy apartment or car right off the bat, but I did want money to go out with my friends all the time.

It wasn’t until after I’d graduated from law school that I learned that my situation was normal: Our standard of living is supposed to go down when we leave home.

Fortunately, I’d been taught fairly well. Except for student loans and a car loan, I didn’t have any debt. Specifically, I didn’t have any credit card debt. I was level-headed enough not to borrow money to go on vacation with my friends and to not spend crazy amounts of money at night clubs. And my car loan was manageable.

Looking back, I wish I’d known then what I know now. I could have graduated with just two-thirds of my student loan debt if I’d actually lived frugally instead of just barely within my means.

But because I didn’t have credit card debt and because I had a good job after law school, it didn’t take me that long to build up to a comfortable lifestyle – with Marc, of course, since we’ve been partners since then.

Part of the current economic crisis is the result of people my age, give or take ten years, who felt they were entitled to a certain lifestyle regardless of their income. They didn’t realize, or weren’t willing to accept, that their standard of living ought to be commensurate with the amount of money they brought in.

It’s hard to lay blame on any one group, but it’s easy to start with parents. It’s our job to make sure our children understand responsibility of all kinds. And it’s never too early to start teaching financial responsibility.


Anonymous said...

It better not be. But Obama scares me.

By the way, I just found you via Wisebread's Top 100 PF Blogs. Congrats on making the list!

Anonymous said...

I couldn't agree more! I recently graduated college and have no debt whatsoever. It was a lot of hard work and required sacrifices. A lot of classmates and co-workers constantly spend money, but it's money they don't have!! They have a sense of entitlement that is funded by private student loans and credit cards... they will be paying for their time in college for years to come all so they can have the latest technology and posh vacations now.

Anonymous said...

I think the American Dream really is the freedom to choose how you want to live your life, and in that, I agree it is not dead. But, I completely agree with you on the fact that parents have to educate their children. It hasn't been getting done over the years and it's a huge reason we're in the mess we're in today - lack of financial education.

I think the school's should be teaching it as well. Financial management is important, I can't understand why they don't offer a basic Finance 101 course. The ability to balance a checkbook, read a statement, understand credit and how it works, etc. are all things kids need more than they need some of the other classes being offered.

Anonymous said...

Good post. We've been thinking about a lot of this stuff too.

We also think about it because, depending on the choices they make, our kids may likely be in lower paying careers than us. (I imagine you ponder this too.) We're fine with that, of course, but I think paying attention to how we teach them, and how we manage their expectations, will be important.

Any advice for teaching kids about finances? (Not that I'm intending to start in utero, just like to be prepared. :) )

Anonymous said...

I have been using to manage my personal finances for a few months now. Its the easient to use free, offline personal finance manager I have seen so far.

Anonymous said...

I don't think I ever agreed with the word dream. Dream implies something that people hope will happen and their dream will fall into their lap. I like to think in terms of goals. With goals, you have plans and they can be time bound, but the point is that you are working towards something.

I agree with Kristy in that we still have the option of living the life we choose to live.

Great post!