Saturday, January 18

OK Boomer: Why You Shouldn’t Take Financial Advice From Your Parents

Google+ Pinterest LinkedIn Tumblr +

“Ok Boomer” is the only appropriate response to tone-deaf financial advice from a generation that enjoyed the easiest wealth accumulation in history.

Boomers enjoyed unprecedented gains in residential real estate and the stock market, coupled with affordable post-secondary education that led to good-paying jobs with pensions and full benefits. Boomers had it easy. Which is why their financial advice sounds so remarkably out-of-touch. 

RELATED POSTS

Mom and Dad want what’s best for you, but that doesn’t mean they’re always right. In fact, plenty of their financial advice is downright wrong and should only be answered with “ok Boomer”. 

What is “Ok Boomer”?

“Ok Boomer” is GenZ’s viral response to out-of-touch Boomers who fail to recognize how much the world has changed but continue to offer advice as if it’s still 1980.

The phrase initially appeared on TikTok, but quickly went viral across all social media platforms. You’ll see “Ok Boomer” as a response to the wild things Boomers say across the web. It’s all over Facebook, peppering the comment section of articles online, and the hashtag #okboomer is trending on Twitter.

Instead of responding to their long-winded rants about entitled young people with facts and reason, Millennials and GenZ are dismissing the older crowd with “ok Boomer”.

Should you offer old people more than just “ok Boomer”?

Whether or not you want to engage with a ’50s baby about Climate Change is up to you, but it’s probably not worth the effort. If Boomers think climate change is a hoax and can’t be convinced with actual science, what makes you think they’ll be swayed by math?

There’s no point in engaging with a populace that thinks Facebook Memes are a legitimate news source. It’s better to save your energy to focus on all the extra income you need to earn to merely eke out the living Boomers were entitled too even if they dropped out of high school. When they try to give you financial advice, nod politely and then ignore it. 

What your parents are getting wrong about money (and everything else)

Why is Boomer’s financial advice so bad? Because it’s completely useless in the current economic environment. Boomers have been blissfully unaware of how much things have changed over the past 30 years. 

Here’s some ok boomer financial advice your parents are probably saying that you shouldn’t listen to:

You need a degree to get a job

In the ’70s and ’80s, a college degree was the ticket to a solid upper-middle-class life. Back then, less than 15% of people pursued post-secondary education. Now that figure is closer to 30%. This means stiffer job competition as the pool of competitive applicants grows, making it harder than ever to get a good job. While a university degree might have been a golden ticket in the past, it’s nothing special now.

To add insult to injury, the cost of university has increased by more than 500% in the past 25 years. When Boomers tell you to get a degree to get a good job, they’re remembering the good old days when they could pay their tuition, books, room & board with what they earned every summer. 

Your parents didn’t go heavily in debt for their educations. Today, the average graduate is carrying nearly $30,000 in student loan debt. Boomers never struggled with this burden, which is why they can’t comprehend how impossible it is to get ahead financially with a big student loan payment.

In short, pursuing university has gone from a sure-thing in the job market to a very expensive gamble. If you can get a career that doesn’t involve drowning yourself in debt until your 40’s, do it. If you don’t need to go to university, DON’T GO. The world has changed, kids. Play the game or get the hell off the field.

Houses always go up in value

For most Boomers, residential real estate has become their largest asset. Without even trying, most have seen a 10x return on their initial investment, giving them a cushy nest egg to retire on even if they were irresponsible in everything else. 

As a result, Boomers can’t stop telling their children that homeownership is the path to wealth. Even if current numbers don’t add up. 

The Canadian housing market is 60% overvalued. House prices have surged so far ahead of Canadian incomes homeownership isn’t even a possibility for some adults. The numbers clearly and plainly show renting keeps more money in your pocket than buying. But Boomers will still tell you to buy a property.

Saving is easy

Mom and Dad remember savings accounts of the early 90’s with double-digit interest rates. I know, it seems so unbelievable to us who find even the highest interest savings accounts return less than 2.5%. Nevertheless, legend says there was a time when people scoffed at 5% interest because they could get 12% elsewhere. 

This is not the world we live in. Frankly, it’s not the world mom and dad live in either so they really need to get with the times and rebalance their retirement portfolios before they’re eating cat food and hoping you’ll take them in and let them live in that the garage of the grossly overpriced house they told you to buy.

Saving is hard, and it will take a long time to accumulate anything substantial. Even when you do it right, it might not be enough for what you want or need. Mom & Dad won’t understand this and will just give you a disappointed face. If you were a smarter child you would have found a way to beat out a market downturn. This is just like the time you got a B in grade 11 math! Why can’t you be more like your sister??

Having kids is affordable

One of the biggest financial challenges facing young adults now is starting a family. In Boomer times, one working adult earned enough to support a family, but now it often takes two adult incomes to maintain a household. But to earn two incomes, a household with children needs access to childcare.

RELATED POSTS:

North America is in crisis when it comes to affordable, accessible childcare. Most accredited daycare centres in major cities across Canada and the USA will cost $1,500 to $2,000 per month. Even more affordable options, like dayhomes, cost $1,000. Childcare costs have more than doubled in the past two decades.

Maybe Boomer parents should offer some free babysitting courtesy of grandma and grandpa? 

Finally, don’t let your Boomer parents manage your money

Another problem with Boomers is they can be helicopter parents. They can’t keep their hands out of their children’s lives, and that includes out of their children’s bank accounts. For reasons that don’t make any sense to me whatsoever, plenty of adults let their parents choose their investments, have access to their bank accounts, and offer up criticisms (or even limits) on how and where they spend their cash. 

If you’re an adult, there’s no reason your parents should have access to your bank accounts. They should not be able to withdraw money, check your balances, and they should not be managing your investments. 

Parents may offer advice or suggestions, but your money is yours and it should be managed by you. If your parents are managing your money, they’re robbing you of the opportunity to learn how to take care of your own finances.

What should Millennials and GenZ do to build wealth?

Keep going. You can still achieve financial security even if you don’t have the privilege of being born before 1965. However, understanding why things are more difficult for you than they were for mom & dad will help you navigate it better.

Continue to focus on increasing your income, paying down your debt, and saving and investing what you can. It will be harder and take longer than it did for previous generations, but it’s not impossible. Ignore the noise and keep pushing yourself. 

Ok Boomer parents mean well, but they’re not always right!

*This post was first published on September 16, 2014, under the title “Why You Shouldn’t Take Advice From Your Parents”

Share.

About Author

Student debt killer, super saver, and stock market addict. BSc. in Chemistry from the University of Alberta, MBA in Finance from the University of Calgary. CEO x 2 and MOM x 1. Currently residing in Calgary, Alberta, Canada, but hooked on travelling.

15 Comments

  1. Great post Bridget!

    I often consult with my parents on major financial decisions, pick their brain for advice, or share my goals, but ultimately I manage my own accounts, which I agree is how it should be!

    Ugh, I couldn’t imagine my parents having access to my bank account or setting limits on my spending. Yikes!

  2. passionatelysimple79 on

    Totally agree with parents not having access to accounts! I’d be completely worried as to what their intentions were and if they were going to use the money for my benefit or theirs. At some point you have to be willing to take risks on your own to learn. It’s really helped me realize what works best for my situations!

  3. My parents are pretty awesome regarding money, but then they are pre baby boomer (which seems to make all the difference). I’m 27, and make over 70K as a technologist (I agree with no degree!). I actually have a ‘joint’ account with my father. We did it when I was 19 and my free kids account changed to adult fee ridden. It is the best thing ever. My dad has the platinum seniors account to EVERYTHING is FREE. ALWAYS. He doesn’t monitor my account, but it sure makes it easy for him to pay me back if I pick up something for him. Or if I want primo CAD-USD exchange, he can do it seamlessly. I also have a joint credit card with my mom (got it when I was 16 when I lived away for a summer). Today I’m buying tickets online for her since the interweb is too much for her. I could see how this wouldn’t work with most people, but for us it is a really great way to keep things even.

  4. I love this article. I got decent financial advice as a child, but things got pretty chaotic during my adolesence. Parents are now split up, my dad still preaches good financial advice but definitely does not practice it. My mum is more along the lines of “Buy it now, you deserve it! Figure out how to pay for it later!” It’s taken me years to break down that mentality in myself because unfortunately as an impressionable teenager, those ideas stuck with me until now (age 26).

    I remember the day I transferred my loan from my Mum’s line of credit (I was using hers for a lower interest rate), opened my own credit card, and took myself off our joint one. Even though it was costing me more in interest, it was liberating that all of my finances were now MINE and I was the only one in control 🙂

    Now I’m less than 12 months away from being debt free (started with $22,000+ of consumer/student debt and a financed $21,000 car that would have ended up costing $29,000 total…selling that was one of my best moves yet) and will have saved enough for a trip to Asia in the meantime. Your blog is keeping me motivated!!! 😀 Thank you!

  5. ALL OF THIS CORRECT.
    Awesome, everything here is great.
    Also super important to realize that your parents are human and thus not perfect and probably made a lot of mistakes. Ask them about the mistakes and how you can learn from it inside of blindly following their advice.

  6. Great post! I was just discussing with my friends about the whole housing thing — and how much our parents’ generation benefited from drastically rising prices whereas we likely won’t be as lucky to have our money work as hard for us as theirs did.

    I gotta shake my head at the post-secondary thing too, because you already know how I feel about that one! I doubt I would go to university if I were young again.. and go a less traditional route instead (trade school!!).

  7. All excellent advice! Especially the university thing. University is definitely not a one way ticket anymore, yet many parents that I know would never encourage their kid to go to trade school, even though they can make MORE money and spend less on education.

    I think this topic is pretty near and dear to most millennials’ hearts, since many boomer parents just can’t seem to figure out why their kids can’t get their shit together. Meanwhile we’re floundering around with low wages, high student loan debt, and unattainable housing prices.

  8. While I agree one should think about their options before getting a degree, I live in a world where I can’t think of many people who have careers they really love without a degree (or occasionally, a few years of training in the trades, but this is rare). You should get a degree sensibly and think about ROI, and I do agree it is no longer a “golden ticket”. But I think that means you can’t JUST get a degree, you also have to get it in something useful and/or do something useful while in college. Generally speaking. Or be brilliant without a degree, but I think that is just as risky and much more difficult!

    I was appalled when my now-husband still had his bank statements going to his parents when he was much too old. I was annoyed when she advised him to “mail the check” as soon as he got a credit card bill, because 1) check?? 2) obviously! (He got the card upon my advice to build credit.)

    I’m barely (or maybe not?) a millennial, so maybe this doesn’t ring as true for me for that reason. The timing of my college grad and moves was all very lucky from a global economic perspective.

  9. Luckily, mine don’t offer any opinions at all which makes it easier.

    Anyway, you shouldn’t take advice from anyone unless you’ve done the research yourself. Otherwise, they’re not the ones who are going to fix the mess / problems you get yourself into, you’re the one on the hook for that.

    Take responsibility!

  10. I live in the U.S. and got married just as the U.S. housing bubble burst was recovering. My husband and I bought a house because we knew it was a long-term goal of ours, and with interest rates and housing prices only just recovering from the crash, we knew we’d be hard-pressed to find a better deal.

    That said, I watch a lot of Canadian HGTV and I cannot believe the housing prices in Toronto especially. They’re insane. Our 2010 builder-grade townhouse (1,800 sq ft, 3 bd, 3 bath) cost just north of $200k, which doesn’t seem to get you anything in Canada…

    (commenting mostly because there haven’t been housing comments yet, like you said there would be. 🙂 )

    Also: I definitely don’t take my parents’ advice. They expect to always have car payments, take out home equity lines even when they could save up for home repairs, and don’t always pay off their credit cards… at 26, with a mortgage, a husband, a baby, and two cars (no payments), I’m closer to complete financial independence than they are.

  11. Bridget, I completely agree! The older generation just simply doesn’t understand our current financial situation in today’s economy. So when they do give advice, its usually based on how things were back during their time and they truly don’t understand how this system works. They look through the lenses of the 70’s and 80’s and then try to draw conclusions from there. I hate to say it, but even though we do make our own decisions in life, the struggles that the younger generation deals with, is partially due to the lazy, apathetic, ignorant, uninformed mindset that the older generation is subjected to. They cared more about luxuries than the freedom of their children and grandchildren. And now the young people today have to work 3 times as hard just to obtain a fraction of the so called assets that the older folks had. Whats even more disturbing is that the older people actually think in their minds that the younger have it easier. Now that is a strong delusion that they are under. And then they have the nerve to call us lazy. Ha give me a break. I can go on and on about their arrogance.

  12. The fallacy is that the previous generations had it easier than the current generation. The flip side of the high interest savings the Boomers were getting is the high mortgage rates they had to pay for their homes. In fact, as far as real estate is concerned, Gen X had it easiest (still relatively affordable homes at relatively low interest rates).

    Each generation has it’s own challenges. Millennials have to deal with unaffordable real estate and low interest rates. But they have historic unemployment where they can move companies to leverage higher salaries. They live in a world where the internet has given them limitless opportunities from the comfort of their homes.

    The core financial principals remain the same: earn a good salary by developing your career, spend less than you make, keeping fixed costs under control (there is nothing wrong with renting if the math works that way) and invest in a low-cost diversified portfolio (which Boomers couldn’t do).

    I remember my parents (both Boomers) sitting at the kitchen table every week going over the budget, keeping cars as long as they ran, taking modest family vacations (mostly camping) and rarely eating out. I remember my dad working his butt off travelling to Africa to develop his career, while doing 2 masters degrees (that was before e-mail and online courses by they way).

    To dismiss the previous generation’s successes as simply “privilege” is just simply narrow-minded. It takes decades and decades of strong financial habits to reach your financial goals and Millennials don’t see the struggles the Boomers went through in their 20’s or 30’s. The path may be different than previous generations, but the core principals remain.

    • It’s only a fallacy if you genuinely want to ignore reality. Boomers enjoyed the largest run up of stocks and real estate in history. They needed no education to secure good jobs. They received pensions. No one has had it easier than Boomers.

      • The “reality” is that we are currently in the longest bull market in history. We have been in a low interest rate environment in forever, the likes of which previous generations have never seen. Rates could double tomorrow and that statement would still be true. Technology advancements have been exponential. We are able to invest in diversified portfolios at a tenth of the cost previous generations were able to do. We have resources and access to information (financial or otherwise) at our fingertips with the internet that no other generations has had before. As far as pensions go, people have RRSP and TFSA now to fund their retirements (TFSA didn’t even exist until just a few years ago). Pensions weren’t given – employers take (and took) part of your salary to fund them – they didn’t come out of thin air. Now people are responsible for their own retirement funding. Yes, real estate is unaffordable in many locations. Rent, move away from big cities and commute or work remotely. There are options to make it viable for your situation.

        To crap on a whole generation because this generation hasn’t yet achieved their status after a mere decade of employment is ridiculous. I say “yet” because good financial habits over decades can lead to being affluent, in any generation.

        And spouting out “OK Boomer” to blanket a whole generation shows such little appreciation for other generations’ challenges and obstacles through their journeys. I’m not even close to a Boomer but can certainly respect their views and opinions, even if I don’t always agree.