Educated and Broke: The Dilemma of My Generation and What To Do About It

Educated and Broke: The Dilemma of My Generation and What To Do About It

February 14, 2016

People have asked why I have started Alumni360 and I start with this story.

There I was, sitting on my friend’s couch watching her two children run around playfully. She was telling me her story of how she and her husband thought they were making good choices. They both attended college. She went to a state school and he went to two private schools for a bachelor’s and a masters degree in public service. Fast forward 5 years and they are in a combined debt of $250,000 and barely make enough to pay the bills. “How did we get here?” she whispered to herself, “How did we get here?”

 

Sadly, she is not the only one in that situation. Many of my peers, including myself, played by the rules; both spoken and unspoken. We stayed out of trouble and finished high school with honors. We then went on to good state or private universities but now we’re either still searching for a good paying job or have an income that is well below the amount needed to offset the debt load we signed up for.

 

After my friend’s story sunk in, I started shaking my head, “What went wrong? Where did we miss a turn? Why are we educated and broke?”

 

This conversation happened 5 years ago, right around the time I had my financial epiphany, which caused my husband and I to eagerly start our journey of paying off almost $100,000 of debt, (which we just completed in December of 2015!!).

Throughout our journey and continually seeking out the answer for ‘How did we end up educated and broke?’, I believe I finally found my answer.

Our financial foundation is developed like our other schemas, through experiences and the culture of our upbringing. If you were brought up in a home where every dollar is spent, chances are high that you will eventually run a household where every dollar is spent. If you were raised with parents who shared the importance of saving 10% of your income in an investment account, chances are you did just that.

 

When I teach financial seminars, I challenge my adult students to reflect on the climate and systems (or lack thereof) of their financial upbringing. It’s mind blowing for most of them. As humans, over 50% of our character and beliefs are built through learning from those closest to us. So what did you learn? Even more importantly, what are you teaching, either directly or indirectly, to your children?

Being raised in a single parent home, my mother, a dynamic educator herself, did the best she could with the information she had available. She understood the importance of getting a solid education that included the arts, in order to maximize our opportunities. Even though she was skilled in many areas, finance wasn’t one of them, and raising four kids on a meager teacher’s salary meant she had to be creative and resourceful. It turns out she wasn’t savvy in finances because she wasn’t taught. And this happens to be the story in many families, and for African Americans, a story that reaches back far into the slavery times.

This is a generational issue.

We’re taught to follow the law but not taught to save.
We’re taught to study hard but not taught ways to create passive income.
We’re taught to give (which is VERY important) but not taught to invest.

 

In many households, especially in the demographic where I come from, conversations about investments, savings, assets versus liabilities, and the difference between appreciating and depreciating items rarely occur. All we hear is study and get your degree and then you’ll make it out of the ghetto and have a successful life.

 

Now, because of the plight of student loans, this is no longer true.

 

There’s more that is needed in this dialogue and PcW has addressed this. Partnering with Donorschoose.org last year, PwC ran a campaign to support 3rd -12th grade teachers with curriculum that teaches financial literacy while students are still forming their beliefs systems about money.

 

It doesn’t matter how smart and ambitious you are, if you have no basic understand about finances, life will be tougher than it needs to be. In addition to the student loan mess, due to our consumerist society we are all up against advertisers who have invested millions, if not billions of dollars to separate you from your money. And the stats show they are winning. In recent years, our nation has had a negative savings rate and many American families are struggling with significant credit debt and student loans.

We have to be intentional about doing better in this area AND be intentional about teaching the next generation about starting their financial journey on the right foot.

 

This is why I started Alumni360. Thanks for joining us on this dynamic journey!

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