I’m excited to be participating in today’s Roth IRA movement. There’s more information about this movement towards the bottom of this article.
I wish someone told me about Roth IRAs when I got my first real job. I was a teenager, working in a local Radio Shack store, even though I didn’t even know what a soldering gun was. So many years later, it’s hard to know what would have gone through my mind if someone were to start talking to me about investing part of the money I was earning. I had a bank account, but I’m sure most of the money I earned from working was spent on entertainment with friends. I wasn’t thinking about the future, and I’m not convinced that someone pointing me to an article about a Roth IRA would have changed my approach.
But it might have.
It would have been impossible for me, anyway, unless I had been visited by a time-traveler or I had received a book from the future.
Roth IRAs weren’t invented until years later, while I was in college. (This detail isn’t that germane to the point, as traditional IRAs were available and would have in most respects been appropriate for saving for the future.) Anything other than stock trading was missing from my understanding of investing. Considering Roth IRAs existed by the time I graduated college, why didn’t I know about Roth IRAs when I started my first job after that point? Well, they still weren’t widespread by then, and I was earning too little money to even conceive of dedicating some of it to my future.
I would have been wrong, of course, but I only know that now with hindsight. The problem with trying to educate young people about investing for the future is that it’s easy for them to be stuck in the mindset that other pressing needs deserve attention above investing for the future. Until someone’s mind is open to the possibility of financial security in the future with today’s sacrifice, any information about investing for the future, with Roth IRAs or not, just won’t have a strong effect.
Today, though, there are ways to make this transition easier. The benefits of investing for the future no matter how little an amount have been discussed on Consumerism Commentary ad nauseum, but they bear repeating. I’m not really discussing retirement as a goal. Most discussion about investing for the future revolves around retirement, but it’s unclear that the traditional concept of retirement will be relevant thirty, forty, or fifty years from now.
- Investing in a Roth IRA with your first job creates a new habit that lasts your entire life.
- The Roth IRA, with its ease of access, is a perfect gateway to investing for the future.
- When you intentionally invest in a Roth IRA with every paycheck, you can easily see the effect your choices have on your wealth.
- When you create an automated transfer plan from your checking account to your Roth IRA, you take some of the stress out of investing.
Good investing habits start with the Roth IRA because it’s so easy. There’s no concern about tax-related issues, because you invest with “after-tax” money. Minimum balances at brokerages are typically low for Roth IRAs because these companies know that these types of accounts are best used by people new to investing. The one step, opening a Roth IRA, opens a world of financial possibilities, and it’s possible to open an account with as little as $100 per month.
It’s easy to blame ignorance when we see young people in their first jobs, earning money but not saving for the future. Here are some typical anti-youth misunderstandings:
- “If only they had a financial education and understood that the earlier they invest in the stock market, the wealthier they’d be four or five decades in the future, they’d want to invest immediately.”
- “Today’s kids are focused only on the ‘now’ and don’t think about their future needs.”
- “The public educational system is to blame for the lack of solid financial knowledge among today’s youth.”
- “Why can’t parents take some responsibility for instilling good financial habits in their children?”
- “Get off my lawn!”
There is some relevance to at least four of these misunderstandings, but what makes them misunderstandings is that the point is really about cognitive development. By the time most teenagers have their first jobs at fifteen, sixteen, or seventeen years old, their brains are not yet equipped to consider the concepts of investing for the future. Of course, different individuals experience different rates of cognitive development, but attempting to feed someone knowledge before his or her brain is ready to grasp some of the higher concepts necessary for full understanding is a waste of time.
You can hope that some of the ideas stick with a child long enough for the connections to be made later in develop. That’s why some parents teach and model good financial habits with their children starting in kindergarten or earlier, but when it comes to the practical side of investing, adolescents in their first jobs are often not mentally prepared. As teenagers seeing for the first time how they have control over their lives outside of their parents’ house, there’s a tendency to want to make decisions independently, and without the influence of an adult preaching about prudent financial habits.
In their minds, adolescents may have already weighed the benefits of keeping more of their income for use today against the benefits of saving for the future and decided, independently, that their immediate needs are more pressing. They may believe they’ve already made the right decision.
I don’t know if I can propose a solution. Investing in a Roth IRA is a critical step towards financial freedom because of its ease, accessibility, and habit-making features, but if a young individual doesn’t apply this approach during the critical time when he or she first begins earning income, the barrier grows with time and it can be more difficult to start later on. The numbers have always been obvious; a five- or ten-year head start in investing in the stock market almost always pays significant dividends when it comes time to draw upon that nest egg, but these words are meaningless to young people who have other concerns.
Taking a slice of the paychecks from the first job can be done with little encroachment on expenses; directing 5 percent of each paycheck to a Roth IRA would hardly hurt at all. With a minimum investment of $100 each month, any working kid could find a way to make it happen, if not immediately, then after saving up for a few months and starting with a lump-sum rather than a periodic investment.
It’s not going to happen on its own, though, and it’s still unlikely to happen even after reading an article extolling the virtues of investing and saving for the future. It’s going to happen when the synapses in the brain fire in such a way that saving for the future makes sense and when sacrifice, no matter how small, is an acceptable option. In some ways, the latest guidelines that encourage automatic enrollment in 401(k) plans see this problem and have arrived at a solution: you’re busy thinking about other things, so we’ll get you started automatically. There’s always the argument that this policy benefits the financial industry more than the investors, but it does benefit the investors.
How do you propose encouraging young individuals in their first jobs to begin saving for the future with a Roth IRA?
Thanks to Jeff Rose, a Certified Financial Planner, who initiated today’s Roth IRA movement, involving more than 130 partners, all of whom are taking time today to discuss Roth IRAs on their websites, newsletters, or other publications.
Photo: stevendepolo
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For the most part, individuals who wish to invest in theater, due to the risky nature of the business, must be accredited. The investor’s household must have a net worth of $1 million or more, excluding primary residence, or income of at least $200,000 ($300,000 for a married couple) for the past two years. There are ways to invest as a non-accredited investor, but the competition is higher for these opportunities because producers are limited in the number of non-accredited investors they can accept.
Write a Guest Post for Consumerism Commentary
This article was written by Flexo in Administration. 1 comment.
Out of the hundreds of emails I receive every day, many requests I receive are from writers who would like to contribute to Consumerism Commentary in some form, such as a blog guest post. Many bloggers, particularly those whose websites are popular, can attest to receiving similar requests. They come from a variety of sources: freelance writers looking for work, other bloggers looking for exposure, and companies looking to get links back to their websites.
Although there are some periods of time I don’t accept any guest posts, I’m usually happy to entertain all requests. I’m busy, so it can be a great relief when I have the opportunity to let someone else write. I’m not able to respond to every email, though. I often spend as much time — or more time — proofreading and editing an article by a guest blogger as I would writing my own articles. In fact, guest articles often result in being more polished and more professional than the articles I write for myself! I am certainly not a perfect writer and I don’t expect anyone else to be perfect, but I tend to ratchet up the standards just a bit when it comes to guest articles.
Who is suited for writing on Consumerism Commentary
Before you ask to write an article for Consumerism Commentary, become familiar with the community. Participate in discussions on the website, become a fan on Facebook, and be engaged in other social media aspects of this website.
The right pitch for the right article
Sometimes, the first email I receive from an interested contributor contains the article in full. This is not a good thing. There’s a reason that television studios or producers don’t read unsolicited scripts. If they were to read a script, and they happen to use an idea that they received, whether intentionally or not, they could be exposed to legal issues. I will not read any article sent to me without communication beforehand.
I’m looking for topics and concepts that are somewhat original — anything that wouldn’t necessarily appear elsewhere. I appreciate relevant personal stories, detailed and well-thought-out analyses, and exercises in opinion if it’s clear why your opinions are exceptionally valid (for example, you’re an expert in that particular field). Some controversy is fun, but Consumerism Commentary is not a political blog. Rants and one-sided criticisms would not be appropriate for the website.
I’m open to any topics related, even tangentially, to personal finance except marketing, blogging, and earning income online.
It helps to understand the demographics of the Consumerism Commentary audience. According to Quantcast, the audience is weighted slightly above 35 years old, though there is a strong showing in the 18 to 35 age range. The audience is heavily weighted in favor of high income and graduate-level education. I won’t accept articles written to appeal to a fourth-grade reading level.
In your message to me, briefly explain who you are, why you’d like to write an article for Consumerism Commentary, what you expect to receive from the experience, and offer your idea. If you have several ideas and are willing to let me choose one, that is fine as well, but make sure you have at least one solid idea before contacting. Here’s a nice checklist to help ensure your message will make it through and I’ll respond to the request:
Be sure to proofread your message to me, as grammatical errors or a poor command of English could reflect negatively on your ability to produce an article for Consumerism Commentary. I’m not immune to typos, and I forgive them easily. With a large volume of requests, I pay attention to detail.
Once you are ready, you can contact me here with your idea.
Providing the article
Once we’ve agreed to a topic and discussed expectations for timing, send the first draft when it’s ready. Most of the time, only one draft is necessary. I don’t have specific guidelines for writing the article, but I do have a few small restrictions.
Have someone proofread the article for you.
It is rare that after accepting a proposal I would reject the final article. By accepting the proposal, I have a good suspicion that the result will be suitable for Consumerism Commentary. I would not require a writer to go through the effort of writing and revising only to reject the outcome.
In terms of format, I prefer receiving articles in plain text with HTML tags if necessary. I will add appropriate styles and formatting. We use Gravatar for profile avatars, so make sure you have a high-quality Gravatar image associated with your email address. You may also provide a three or four sentence bio that will be included in an “About the Author” section. This bio will contain the link to your website or book, if you have one.
The legal bit
If you submit an article for publication on Consumerism Commentary, you must be legally allowed to do so. Primarily, you must own the copyright to the material you provide, and by providing material to Consumerism Commentary, you are transferring to us all your rights and interest to the content. The content you write must be completely original and never published anywhere else, online or offline, and it must never be published anywhere else in the future.
Benefits of contributing a guest article
Contributing an article to Consumerism Commentary can be a great way to reach a broad audience. Contributors and partners have benefited from increased traffic to their websites, more RSS and newsletter subscribers, and stronger brand awareness. Your content will reach over 15,000 RSS subscribers, Twitter followers, and Facebook fans, and through syndication deals, your article may appear on websites such as Forbes, BusinessInsider, MSN, Yahoo, and others. Quality articles will easily convert Consumerism Commentary readers to your own fans.
Here is a selection of the articles provided by guest bloggers at Consumerism Commentary from the past few years:
If the above sounds good to you and you’re ready to move forward with an idea for a guest post, contact me.
Photo: ian.schofield
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