Today's entry also appears online at www.insideindianabusiness.com .  It was submitted and used as a perspective piece.

         

By: Peter Dunn - Author, "What Your Dad Never Taught You About Budgeting"

Category: Personal Finance

People in older generations often like to evaluate and criticize the generations that come after them. They like to spin tales of the good old days when neighbors knew each other’s names and business deals were sealed with a handshake. They tell us that back in the day, you could buy a car out of a Sears-Roebuck catalog and build your dream home for $20,000.

We nod, smile, and tell them how the world is different now.

They tell us how they used to cash their paychecks and then put different amounts of that cash into envelopes labeled, groceries, light bill, mortgage, insurance and other regular bills. They did this because they wanted to make sure that they had enough money to cover their monthly expenses. They even had an envelope for savings, and if they had any money leftover once the envelopes had reached the right amounts, that’s what they used for fun.

We nod, smile, and tell them that we make way too much money to do something that silly.

They tell us how they had their checkbooks balanced to the penny.

We nod, smile, and tell them that we have online banking that sends us automatic emails to our BlackBerry.

So goes the conversation with members of Generation X and Generation Y and members of any Generation that came before we started labeling them with a letter.

Sociologists define GenXers as those born between 1961 and 1981. GenYers are anyone born after that.

I define both Generation X and Y as the people that make the worst money decisions of any generation.

We (Generation X and Yers) have many more financial management tools than our predecessors, yet we ignore the basics of money management. We rarely balance our checkbooks. We instead go to our online banking accounts to see if we have enough money to make our next purchase. We use our debit card constantly without tracking the expenditures, as one would in a check register. And the worse atrocity of all is that we ignore our income as a wealth-building tool. We instead micro-manage our stock portfolio, which is often less than our annual incomes.

We are the generations that have the highest percent increase in annual compensation, yet the lowest percentage increase in savings. We make what we spend, and we pray to the stock market for grace.

We have unique challenges, just like every generation. Some of the bigger ones aren’t even our fault. “Society” (aka The Man) has brought forth fun Social Security conversations, as well as the disappearing pension.

But we as a generation have created Plasma (TV)-envy and malaise-inducing financial technology. Like cooks who rely on the smoke alarm to tell them when the roast is ready, we rely on email alerts from the bank to tell us when our balance dips below $500.

We can’t blame “Society” for the fact that we ignore the fundamentals.

Many of us make six-figure salaries, but won’t have the six-figure per year retirements that the generation before us has. The generation before us made it possible for us to make the type of money we make. We need to leave something for the generation after us.

The good news is that there’s plenty of time to give Gen-Z a better example to follow. And even more time to get our own generations on the road to financial health.

We just need to skip back a few letters to wherever our parents and grandparents’ generations landed in the alphabet. We need to swallow hard and learn – again – from our parents so we can in turn teach our kids.

One of the best gifts we can leave our kids is the one our parents tried to leave us.

Before we can do that, we need to teach ourselves how to spend less than we make (and then how to save the surplus).

We need to forget about credit cards. Heck, let’s pretend they don’t exist. Like monsters under the bed or in the closet – they exist only if we let them in. Don’t be the person that leverages your financial future just to accumulate airline miles via your credit card. (Psst: here’s a tip: mortgage companies don’t accept airline miles.)

We need to involve our partner in our spending decisions.

And we need to balance the archaic checkbook. Every month.

Let’s face it: technology is only going to get better. By the time our kids are in college, they’ll be transporting like Captain Kirk and telling their computer – verbally – to pay their bills for them. They may never actually see a hand-operated pencil sharpener outside a museum and you can bet they’ll never wear out an eraser.

Get to your kid now, before the iPods come standard issue from the bassinet in the hospital.

And if your kids just nod, smile and tell you how different the world is now, then send them to their rooms. And then call your parents and apologize.