May 24, 2011

Resources for Questions About College in the 21st Century

If you have children who want to attend college, or children whom you want to attend college (there is a difference), you'll need to be as prepared as possible to navigate the increasingly complicated process of making the college decision. Economist Gary North has prepared a webpage with an assortment of very helpful and thought-provoking links. Check it out HERE.

May 20, 2011

Math is Important for Home-Grown Jobs

You don't have to go far to find that many young people have few if any math skills. Try giving a young cashier $20.06 for a bill that's $14.56 so that you can get a fiver plus two quarters back. They'll usually give you a look like you came from Mars. They'll have no idea why you're doing what you're doing until they type in the amount tendered and receive instructions from the computerized cash register telling them how much change to give you.

That lack of math skills is why many people are calling for increased math study in American schools. But another good reason is that while there are some jobs available in our still-struggling manufacturing sector, they require workers who are good at math. These jobs are open, right now, and need smart young people to fill them. In most cases, no college degree is required. But you've got to be able to do math.

May 16, 2011

The Evidence Piles Up Against Attending College

I'm not saying no one should go to college. Here's what I say in Thriving in the 21st Century:

You now know that the greatest amount of job growth is predicted in areas that don’t require college, that most kids who attend college don’t graduate in four years and many don’t graduate at all, that college is getting more expensive by the minute and that borrowing to pay those high college costs can have lifelong consequences. You also know now that having a college degree does not guarantee a high income…or any income at all.

Knowing these things, if you still think your child should go to college, please think hard about the following questions and whether you can answer “yes” to most of them:

• Is your child very intelligent and hardworking?

• Does your child have his/her heart set on a career that can only be accessed with a college diploma in hand?

• Of the careers that require at least some college education, is your child interested in one that offers the best return on the considerable college investment?

• Has your child thoroughly researched the chosen career, including talking to employers in the field to see what kind of education they require, and graduates in the chosen program to see if they’re a) employed and b) satisfied?

• Is your child’s choice of major/career one that’s likely to be in demand by employers? (Just because a college offers a major doesn’t necessarily mean that major is in demand by employers. There’s no correlation between number of majors and number of available jobs.)

• Is your child’s choice of major/career one that can be used in more than one industry? (Example: business administration)

• Is your child’s choice of major/career one that will be difficult or impossible to off-shore (as opposed to an area of study that’s currently being chosen by millions of smart young people from China and India)?

• Does your child’s chosen college or university have a reputation for academic excellence?

• Will your child be able to graduate debt-free? In an economy where wages are stagnating and periods of unemployment or time between careers is common, living debt-free will be a major asset as well as a source of emotional peace.

• If your child will need some student loan funding, does he or she plan to earn a degree that is likely to help them earn enough to pay back their debt within a few years (there are no guarantees)?

Regarding the last question, keep in mind that the debt will have to be paid back during a time when wages most likely will continue to stagnate. As a result, college loan repayments could eat up the lion’s share of your child’s future paychecks.

“Yes” answers to most of these questions indicate that you have a child who is motivated to go to college and willing to do what it takes to earn a degree in a field with good prospects for personal satisfaction as well as employment. If you don’t have enough money saved up for the entire four (or more) years, consider sending your child for two years of general education courses at a community college, after which your child can transfer to a four-year college. This is a time-honored plan, and for good reason: it saves a lot of money on tuition and room and board, plus you’ll send a more mature person off to college. Also, if your child’s chosen field of study will require graduate courses, the money you save by sending him/her to community college the first two years can help defray the cost of graduate studies later on.

If you can’t answer “yes” to most of the questions listed above, consider whether college is really the answer for your child. Try to ignore the common wisdom of the 20th century that was drummed into your head, the refrain that insisted that the only sure route to success requires a college diploma, because times have changed.
So I'm not against college, but I think it's clear that college is not for everyone or even for most people. Between its high cost and the questionable need for a degree for employment in areas of job growth, there's a lot of evidence on my side, and it's piling up:

More college grads are settling for low-wage jobs

More college grads are having trouble paying back their student loans

An economist argues that college is not a bubble, it's a "tax-subsidized failure"

See what I mean?

May 13, 2011

Accepting Reality

I began writing Thriving in the 21st Century because I was trying to figure out what was going on as I watched the industry that my husband had worked in for 30 years move overseas, leaving him without work or an income. I also wanted to know how to prepare our children for this new economy we have found ourselves in.

Six years later, I'm ready for the future and I feel like my kids are prepared for it too. But I meet other parents who, once they start putting together the pieces of their own experiences and those of their friends and relatives, become pessimistic about what's going on and what it means for our children's future.

If that's how you feel, you need a dose of reality tinged with optimism. Check out Seth Godin's posts on this topic (Post 1 and Post 2) and you'll feel better.

May 9, 2011

The Supposed College Advantage, UK-Style

Over in Great Britain, college is pushed as the way to make more money, just as it is here in the U.S. This article is typical of the hype. What's really interesting, however, are the comments. People are finally realizing that in the new global economy, not everyone will need a college degree, and most people can't afford one.

May 4, 2011

Teaching Children to be Frugal: A Necessary Skill for the 21st Century

(excerpted from Thriving in the 21st Century: Preparing Our Children for the New Economic Reality)

‘Tis a Gift to Be Frugal

Good old Ben also praised frugality:

In short, the Way to Wealth, if you desire it, is as plain as the way to market. It depends chiefly on two Words, INDUSTRY and FRUGALITY: i.e. Waste neither Time nor Money, but make the best Use of both. He that gets all he can honestly, and saves all he gets (necessary Expences excepted) will certainly become RICH: If that Being who governs the World, to whom all should look for a Blessing on their honest Endeavors, doth not in his wise Providence otherwise determine.
You’ll give your children a great advantage by training them to be frugal. The word “frugal” has negative connotations for some people, but even 200 years ago, smart people like Benjamin Franklin knew that being frugal is an asset. Let’s clarify what frugal means: being careful with expenditures, not buying things you don’t really need, and taking care of what you do have. It doesn’t mean being cheap; in fact, people who only buy cheap goods usually end up spending more time and money replacing those cheap goods when they fall apart. A frugal person can recognize quality, and knows that a quality item lasts much longer than its “cheap” counterpart. (See “Teaching Children to Recognize and Appreciate Quality” on page 364.)

To be frugal is to be thrifty. Thrift was once considered a positive attribute, falling out of favor when America became a society of consumers in the mid-20th century. But there are still frugal people around; their thriftiness helped some of them become rich.

Billionaire investor and philanthropist Sir John Templeton and his wife began married life by living very frugally. They cut expenses as low as possible, bought used furniture (items no one else bid on) at auctions, and only ate at restaurants when they could eat dinner for 50 cents (this was during the 1930s). They did these things in order to stick to their goal of saving 50% of their income. In The Templeton Plan, co-author James Ellison explains,

The fact is, however, that John Templeton was not poor even then. He had a good income and a solid investment portfolio that was steadily growing. Some acquaintances might have regarded his approach to money, housing and the conveniences of life as somewhat eccentric, if not socially unacceptable. After all, the circles that Templeton, the investment counselor, frequented were characterized by big money, big houses, big cars, and big consumer spending in general. But Templeton was not one to live by society’s more superficial values. He followed his own inner dictates and his developing religious beliefs. footnote

And so a radical philosophy of thrift became a deeply rooted part of Templeton’s way of life. He became convinced that success was closely connected to saving, a belief that he has never stopped practicing.
Templeton was not the only wealthy person whose fortune was due in part to thrift. In his ground-breaking books based on his study of American millionaires, Dr. Thomas J. Stanley wrote that despite the stereotype of the free-spending, luxurious millionaire lifestyle we see portrayed in movies and television shows, many millionaires are actually very careful about how they spend money. They also use strategies such as clipping coupons, refinishing and repairing possessions instead of buying everything new, and buying in bulk. In The Millionaire Mind, Dr. Stanley noted:

People in my audiences often ask why a millionaire would clip coupons. It’s not just to save fifty cents today—it’s how much can be saved and invested over a lifetime. The typical affluent family in America spends over $200 a week for food and household supplies. That’s more than $10,000 per year. During an adult lifetime in current dollars, it translates to between $400,000 and $600,000. If you cut off just 5 percent of this amount, between $20,000 and $30,000, and invest it in a top-ranked equity fund, given the rate of return during the past few years the amount earned would have been $500,000. (96)
I’m not suggesting that all or even many of our children will become wealthy by being frugal (though if you teach your child to be frugal and he grows up to be a millionaire, he’ll handle the money better than most would). But the frugal millionaires Stanley studied illustrate the wisdom of being frugal and investing the money saved by being that way.

Teaching frugality to our children will benefit them once they’re grown up and making their way in the global economy. They’ll learn to live simply, thus experiencing less financial stress in the future. In a world where they’ll often be between jobs, frugality could make the difference between financial stability and financial trouble. As writer Charles Jaffe once said, “It’s not your salary that makes you rich, it’s your spending habits.”