Quartz media yesterday came out with an article stating “Your financial fate is sealed by the time you turn 25”.
That title was so strong that I knew I was going to write it before I read it. I simply couldn’t believe how it could be true.
In fact, I typed all the above before finishing the article. As I read the article, it seems like a case were the title doesn’t match the article’s text completely. Here are a few reasons why your financial fate isn’t sealed by the time you turn 25:
- The text of the article cites averages. Your particular case may not be the average. It might be, but it might not be. It certainly doesn’t feel that everyone’s financial fate is sealed by age 25 as the title seems to state.
- You might meet your mate after age 25. I did and it made a tremendous difference in both of our financial fate. It reduced our living expenses while increasing our income.
- We were mindful about our financial situation – The reduced living expenses allowed us to save and invest more. I put more time into learning about personal finance. Compound interest has been wonderful for us. All of this happened after age 25.
- Percentage gains are not what they seem – The article seemed to show that the average person got their biggest percentage gains from age 25-35. It seems to me that you could at the Salary.com data for almost every profession and see that the biggest change is going from a starting salary to a person with 10 years of experience. It’s easier to make bigger percentage gains when you are starting out at smaller numbers. If you were making $50,000 and got a $25,000 raise, that’s a 50%. If you are experienced and making $125,000 and get a $25,000 raise, it’s only a 20% raise. It’s still the same $25,000, it’s not like your employer became cheap in not giving you 50% raises all the time. After you have gotten a few raises, the raises are naturally going to be a lower percentage.
(I don’t mean to suggest that $25,000 raises are normal, I just wanted to make the math easy.)
I get the idea that the article that the magazine is trying to express. It makes some interesting points elsewhere that may be worth analyzing. However, it got a little dry and it seemed like the numbers were so broad that it was make any useful conclusions.
So, instead, I’ll defer to common sense: Your financial fate is far from sealed by the time you turn 25. In a lot of ways, it might not be formed at all.
I totally agree, it’s not even partially written at 25. I’m made some of my biggest changes financially in my late 20s which lead me to my current position. Some people even turn it around in their 40s and 50s.
It so depends on when you realize that saving=good, spending too much=bad, too much debt=bad, become educated=good. My salary was going up quickly in those years, but I still made much, much less than I do now. Of course we’ve had virtually no raises in five years, so with the increase cost of EVERYTHING I’ve been going backward. My 53 I should have learned what to do about that, right?
Lazy Man says
Wesley, I think you hit on the thing I was thinking. There’s a lot of possibility after you turn 25 to make changes rather than having your “fate sealed.”
I see the point the article is trying to make. Many people are well into their lives by 25. I know many people who were married and 3 kids by that point. Not everyone is that way. Hell I just graduated college (my masters) at 25 and a half :)
The point to me is like looking at how some of the old sculpture masters used to work. They would remove parts of the marble and it would be a finished face but the rest of it would be this huge clump of stuff. Leonardo Divinci used to say when people used to remark on his creations of sculptures “I did nothing but remove the extra bits that were hiding what was always in the marble.” That is what they are trying to say. Personalities are set for life in people at 2 years old. Things are always set in people and by 25 they are always going to be set. The issue is you have outside circumstances which are playing at you, which are changing what you naturally are doing.
Most people know who JD Roth is (Getting Rich Slowly). If you have read any of his later materials, he still struggles with being frugal. While he has more money now since the sale of the site, he still has “temptations” and “urges” to revert back to his un-frugal ways. He has to keep reminding himself of the prize and why he “sacrifices”. These are things built into his personality and how he works. This is what the article is trying to say, no matter what you do, you still have a default mode, and you must master it if you want to move on to be a different person. Unless you have a shockabuku moment (https://www.youtube.com/watch?v=zAlS_0wNUQg) , you are not going to change your lifestyle and perception. Kids, marriage, bankruptcy, etc. are all things that can change your reality.
My take, sorry for the ramble, I need more decaf coffee ?
Lazy Man says
I actually think JD Roth is a great counter-example to the article. While he might have spending tendencies and struggle with being frugal, he clearly turned his financial fate around after age 25. A lot of was due to increased financial knowledge, but another huge part was starting a business on the side (and selling that business).
I grew up in a pretty frugal place. I became “unfrugal” when pre-dot-bomb companies where paying me a lot of money. I became frugal again after it became difficult to get a well-paying post-dot-bomb software job. So there could be frugal tendencies, but environment may play a large role. I didn’t think the article really covered this as it seemed to review income earning, not spending, but I could be wrong and overlooked something.
I might not have thought twice if the title was, “Your income at age 25 isn’t going to go much higher.” However, then maybe I wouldn’t have clicked on it.
I have to largely disagree with your stance on the article. As a 28 year old, I see most of my generation as sputtering engines from Geo Metros. I truly believe that the school systems are so harmful at this point that there isn’t a way for students to truly thrive unless they have parents that can help them or they are incredibly gifted. I would venture so far as to say the kids from my generation, on average, can barely hold minimum wage positions as their entitlements mixed with lack of skills have proven to be a devastating combination.
I personally came from two different affluent areas, and the kids with the best opportunities, from public schools, still came out retarded (not trying to be offensive, but rather using the term correctly). I graduated from high school with no English writing ability and very limited math, and I was supposedly in advanced courses. I went to junior college and was placed in remedial courses because I was behind their expectations for transferring into college courses. I had to relearn everything, and I was fortunate enough to have access to college. I understand this is anecdotal, and that I’m a small statistic along with my general area, but I would assume a majority of the population actually had worse education opportunities.
I don’t see how these people in my generation, even with bachelor’s degrees, could possibly be set to make a great wage in a job that has potential for significant growth. I see most of my generation being duped by get-rich-quick schemes, while wasting their time and energy feeling sorry for themselves.
Lazy Man says
I can see what you are saying here Geoff. The article didn’t seem to focus on what was going to happen in the future, but rather what historical data has shown. I tried to show that the conclusion of the article wasn’t necessary good when you piece apart what the data was saying. In short, there was a lot more to the story that wasn’t included.
I don’t know what’s going to become of your generation or the people a little younger than you… or really anyone. I don’t see things getting any better with Betsy DeVos heading the education of this generation.