More Millennial Entrepreneurs?

October 21, 2014

Recent news reports show a solid number–about 54%–of millennials express desires to start their own businesses. But only 8% have tried.

By Kauffman Foundation measures, the percentage of new entrepreneurs between ages 20-34 is actually less – 22.7% in 2013, compared to 34.8% in 1996. Look at more trends here. In the next 15 years, the number of Americans reaching their 30s and 40s – the peak years for entrepreneurs– will be larger than ever.

Do you have thoughts on what’s holding back young entrepreneurs? Do they know how to begin?


Student Debt: Is Today Really Different?

October 4, 2014

Many are horrified at the amount of student debt burdening college grads today– it’s not unusual for a student at a public university in Iowa to borrow $28,000 or more. And how will they ever repay that loan if the economy won’t cooperate and provide good jobs?

Before we bail out today’s borrowers, let’s compare their plight to those student borrowers before them and how they handled their educational goals and loans. For example, let’s consider an in-state student graduating with a B.S. from a four-year public university in Iowa.

About 40 years ago…

In 1975, the cost to attend college in Iowa averaged about $1560/year (and fees skyrocketed the next year to a whopping $2600). Some students had $2-3000 in loans, or roughly 1/4th their cost to earn a bachelors degree in four years.

At that time, the starting job for a typical college grad paid under $10,000/year, and the high end of the job scale would offer 20-25% more, typically for engineers. By comparison, summer jobs for most teens meant roughly $2/hour. The minimum wage was $2.30, except for farm workers, who got $1.60 minimum.

Though several major Iowa corporations had hiring freezes, graduates could find employment somewhere, albeit not the jobs of their dreams nor  for top-dollar salaries. Most took the job anyway.

About 30 years ago…

In 1985, the cost to attend a pubic university and earn the same B.S. degree was about $10,841/year. I know students who borrowed $10-12,000, or roughly 1/4th the cost to attend college for four years.

Comparatively, the starting job for a 1986 grad with a B.S. was just over $15,000, and new engineers would earn about $20,000/year. By comparison, teens would have earned about $3/hour at summer jobs. The minimum wage was $3.35.

Though Iowa was suffering through a severe farm crisis and recession was pending, graduates found jobs somehow, although many settled for less than the job (and salary) of their dreams. But..they took the job anyway.

As for recent grads…

In 2012, the cost to attend a public university and earn the same bachelors degree was about $16,500/year.

Statistics show that undergraduates attending Iowa’s public universities borrow more than average, taking on about $27,000 in student loans. It appears this is roughly 1/4th the cost for a student to earn a degree (which typically takes five years not four, and includes opportunities for leadership experiences on campus, studying abroad, taking unpaid internships, building well-rounded resumes, etc.)

Comparatively, starting jobs for 2012 graduates could be found for $45-50,000/year, and new engineers could earn $65,000/year. Likewise, summer jobs for teens meant about $7-8/hour, and the minimum wage was $7.25.

Though many complain that no jobs exist for them, there are companies that want to hire but can’t fill positions. Some grads are taking those jobs anyway, realizing that maybe they haven’t reached the pinnacle of their career yet and that their dream job (and salary) may come a few years down the road.

In conclusion…

–yes, college costs have risen.

–yes, the amount students borrow is more.

–yes, students take longer to finish college.

–yes, many students give up paying summer jobs for unpaid college experiences.

YET, grads borrow and have about the same percentage of college costs to pay back as ever- about 1/4th the cost of a bachelor’s degree.

AND, while some grads will snag their dream job right away, others realize that, like their predecessors, they should get out there and get working.

Begin with the end in mind.

 

 


Money Habits: Can Parents Teach Them?

August 20, 2014

When it comes to managing money, parents want to set a good example for their children. It seems that knowing how to do that is the dilemma.

According to a recent survey by T. Rowe Price, about 3 out of 4 parents are hesitant to talk with their kids about finances, even though two-thirds of parents were concerned about setting a good financial example for them.

Roughly 1 of 4 parents surveyed feel they are not good with money themselves and shouldn’t be the ones to teach their children. Almost 9 in 10 parents said it’s appropriate for kids to learn about financial matters in school. 

And speaking of financial behaviors the survey revealed….almost half the parents admitted to bribing their kids with money to encourage good behaviors, and about one third admitted to borrowing money from their kids’ piggy banks.


Have You Seen Your Credit Score?

July 29, 2014

A recent survey by Western Union reveals that 44% of young Americans – those age 18 to 34 – have never seen their credit score.


Millennials Are Saving

June 24, 2014

Even though many recent grads have a lot of debt, they think about retirement. In fact, about 70% of millennials have started to save for retirement, says a recent study by the Transamerica Center for Retirement Studies.

In comparison, boomers started saving at about 35 years of age.

The millennial group includes those to 25-35 year olds.


What’s Your Take on IRAs?

May 15, 2014

In the past year, only 15% of Americans spent two hours or more in planning for an IRA investment, according to TIAA-CREF’s annual survey on Individual Retirement Accounts (IRAs). Many often spend more time than that to research a one-time purchase or choose a place for a special dinner.

While most of us know that an IRA is a tax-deferred retirement savings plan, only 17% of us actually contribute. Why don’t more save in an IRA?

Roughly 35% of those polled said they don’t understand what an IRA is, and even more Millennials (about 47%) don’t know. About one third said they don’t contribute because they don’t know enough about the account. Another third of those not using an IRA say they have a retirement plan through work and they don’t feel they need both.

Yet, the average American will come up short when it comes to retirement savings and could use both plans. Will you?


Here’s a handy financial calculator

March 31, 2014

Trying to analyze a retirement investment or see which loan is the better deal for that new car? Check out the financial calculators at Dinkytown

This site offers more than 400 financial tools to help you figure taxes, insurance rates, investment returns, loan payments and more. For example, you can calculate how long it will take to recover from a poor investment or how long it will take to pay off a mortgage at varying payment options. Vocabulary and definitions accompany the calculators, so they are easier to understand.


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