Young Money Sends a Bad Message

[snshijuptr]

Young Money has released an article that encourages young people to set (IMHO) low savings goals.

Set Yourself Realistic Goals

The fact is, you very likely won't save 50 percent, or even 40 or 30 percent. If you commit yourself to such a goal, you've set your bar way too high. If and when you fail to save that much, you may consciously or unconsciously decide the whole savings project isn't worthwhile.

Settting [[sic]] your goal to a more realistic level, like 10 or 15 percent, makes it easier to achieve, giving you the beneficial optimism of meeting your goals.

So not only did someone fail to spell check, but they tell young people that it's okay to have incredibly low savings goals. Young Money's target audience is undergraduate and recent grads who should have very little expenses. Now maybe they are taking into account student loans and other debt, but there is no mention of that in the article. They don't talk about slowly increasing the goals, just setting really low goals.

My apologies for the rant.

[sweeps]

I know what you're saying but considering the target audience, I tend to agree with the author. In my experience it can be very difficult to get young people to save even 10%. If they can do that it will help reinforce the saving/investing habit, and they can increase that number over time.

[jpg7n16]

I think that's more of a behavior minded suggestion than a mathematical suggestion.

In all things behavior modification related, it is usually good practice to start small and gradually work towards bigger.

Same holds true for dieting, running, waking up early, school work, etc.

Far better to start with 1% savings, if it develops a habit that leads you steadily upward to 45%+ one day, than to start at 20% and quit after 1 year.


From the same article: (towards the very end)

This doesn't mean you should set all your targets absurdly low, so that it's too easy to get to them. But an impossible goal creates a sense of frustration that can permeate your life and your attitudes. This is particularly true when it comes to money, which many people rate as the most stressful aspect of their daily lives. So set yourself moderately ambitious goals when it comes to saving, spending and paying down debt, then ramp them up over time as you hit your targets. In the end, it will reduce the chance that you fail immediately and then abandon the entire endeavor.

Would you suggest that someone who has been a couch potato immediately start running 5 miles a day? Well no. That's a good goal to get to, but if you're not used to it, you'll burn out and quit. So run around the block for starters, and build over time.

Does that mean that running around the block once a week is enough to get you healthy for life? No. But it's a good starting point.

Likewise - is 7% savings enough to get you to a comfortable retirement? No. But it's a good starting point.

(I like this analogy if you can't tell This is like the 3rd or 4th time I've posted it on here!)