With recent news from Statscan that more 20-something are returning to their parents' home after moving out, we've had the usual rash of snide commentary from our elders. But sometimes I think they don't understand our context. One columnist said that we're living with our mommies and daddies because we think we're too good to live in a studio apartment with brick and plywood bookshelves. I know an awful lot of people in their 20s, and none of us think we're too good to live in a studio apartment, but many of us can't afford a studio apartment (or can afford it, but our income isn't sufficient to meet the requirements of the 1/3 rule.) (As for the brick and plywood bookshelves, personally I found it easier and cheaper to have the bookshelf from my childhood bedroom brought up here - bricks and plywood cost money too, you know!)
So, I have devised a homework assignment. If you consider yourself my elder, you must complete this assignment before you are qualified to comment on my financial realities. If you don't want to do all this math, you're free not to comment on my financial situation at all.
First, answer each of the following:
1. How much did you earn at your first job?
2. How much did you earn at your first grownup job?
3. How much was your university tuition?
4. How much was rent on your first apartment?
5. How much did your first home cost?
Then, adjust those numbers for inflation to see how much each amount is worth in today's dollars.
Now you need to find out how much each of these things would pay or cost today.
1. and 2.: You can best answer these questions by looking up comparable jobs on Workopolis or your favourite job-finding site. If you can't find any advertisements, NOCS can give you a vague idea of the average income earned - keep in mind that starting income will be lower. If you got paid minimum wage, it can be found here. If you were unionized, google up the union in question and read the collective agreement.
3. Go to your alma mater's website and look up the current tuition rates.
4. Try typing the address of your first apartment building into Google. If that doesn't work, use your favourite local apartment-finding site.
5. Look in MLS and find a comparable home in the same neighbourhood that is up for sale or sold recently. Again, you can also try googling the address.
Once you have all these numbers, you need to calculate the following ratios - both for "back in the day" when they applied to you, and for today. For the "back in the day" calculations, remember to adjust for inflation:
a) How many hours did/would you need to work at your first job to earn one year's tuition?
b) What percentage of your monthly income was/would be needed to pay the rent on your first apartment?
c) How much mortgage could you get with the income from your first grownup job? A mortgage calculator helps. If you don't remember properly, historical interest rates can be found here.
d) How long did/would it take you to save up a downpayment on that home with the income from your first job? The downpayment must be large enough to both meet whatever requirements are set out by the lender, and to fill the gap between your mortgage amount and the cost of the house. This investment calculator can help you, as will the historical interest rates. Remember to pick an investment that matched your real risk tolerance at the time, without the benefit of 20/20 hindsight. Remember too how much of your income you could manage to put into savings at the time.
Finished the calculations? Remembered to adjust everything for inflation? Congratulations, now you have a sufficient sense of perspective to comment on my financial situation. Judge away!
3 comments:
Well I'm not old enough to really have to make those calculations -- and I married a woman who made enough on RIM stock options to make buying our first house a lot easier.
But judging young people today on that basis is like saying that young people today can't hold a job. I've held more than one job per year in my career, on average. All but one of those jobs were on contract, or I was laid off, or the company was gone less than a year after I left.
Making these judgements is complete nonsense. It has nothing to do with the people who are being judged, and everything to do with the egos and self-satisfaction of those doing the judging.
I wouldn't take columnists and such so seriously or personally.
Generalizing, stereotyping, trying to make certain social groups and all of the members of said group fit in a box is a convenient way to address complex issues in a couple hundred words.
I think some older people always will judge the younger generation harshly, and very often for precisely the reasons m@ suggests.
If it was just columnists writing about it for their own egos, it wouldn't be a problem. The problem is that people are making political and parenting decisions based on the misconception that things are exactly the same for us as they were for them.
My parents would have done the same thing, if it weren't for the fact that, in a team effort to get some high school math concept into my brain, we calculated that my tuition would be more than twice my parents' in constant dollars, while my high school job paid about 75% of what theirs did in constant dollars.
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