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The Age Wealth Gap is Getting Bigger & Our Net Worth Sucks. Here’s how we Fix it.

Last updated by on January 17, 2016

I still am not entirely sure what Occupy wants yet, but research released this past week by the Pew Research Center may be central to why they are sitting in the streets in the first place.

Occupy is primarily a youth (under 35) movement. This group is collectively struggling financially.

The Pew Research shows that the median net worth (assets minus debts) of households headed by an adult age 35 and younger has decreased by 68% in the last 28 years from $11,521 in 1984 to just $3,662 in 2009 (adjusted for inflation).

Over the same time period, the median net worth of households headed by an adult over the age of 65 increased a whopping 42% from $120,457 in 1984 to $170,494 in 2009.

Combining the two, the wealth gap between young and old jumped from 10:1 in 1984 to 47:1 in 2009. That’s kind of depressing. But what’s REALLY depressing is…

$3,662 of net worth per household?! Occupiers are pissed because they have no money!

wealth gapThe research didn’t go into reasons why there is an increasing wealth disparity or, more importantly, why the net worth of younger generations is so miniscule outside of home equity declining. There are a lot of reasons – injustices by our banks and politicians have hurt. So have corporate greed leading to massive layoffs, cowardice to hire, and global outsourcing. The rising costs of health care and an education haven’t exactly helped either.

Taking Ownership of your Financial Situation

Despite having the odds stacked against us, there is still plenty of opportunity in this country for twenty and thirty-somethings to financially succeed. Most of those reasons for failure and success are 100% controlled by you and nobody else (wow, that sounded very Libertarian).

If everyone graduating from high school in the next 15 years did the four following things, I am confident that the $3,662 in net worth average could balloon to $100,000 plus.

1. Take Out Zero Student Loans. Period.

Student loan debt has become an epidemic in this country (surpassing $1 trillion and all credit card debt) and is the primary reason why those aged 35 and younger have zero net worth. The cost of a college education has become prohibitively expensive due to tuition inflation.

Notice how I am not saying “don’t get an education”. There are ways to get an education that don’t involve taking out $75K in student loans. Some traditional high school to four-year university cheaper alternatives include:

  • Going to a community college for at least the first two years of your education and paying for the tuition with income earned from working over the summers.
  • Getting an apprenticeship or learning how to do a job that does not require a degree.
  • Living at home for a few years while working to save enough to pay for your tuition entirely without taking out loans.
  • Living at home while going to school versus paying for room and board.
  • Applying for financial aid and/or working hard for scholarships.
  • Finding a small business and working your ass off to the point that they can’t help but bring you on as a partner.
  • Starting your own business.

The last thing you should do is follow the traditional education path. Look where that has gotten us collectively.

2. Budget Everything & Attack your Expenses

It’s simply not good enough to aim to make more than you spend. That is, unless you want to work for others until your final breath and end up in financial crisis when the wind blows the wrong way.

So many in our generation take a nonchalant attitude towards budgeting. If they aren’t adding credit card debt, they see that as a win. Then what happens when they lose their job, get a pay cut, have a medical emergency, have a child?

Financial success is like anything in life – you have to put in the learning, attention, and effort in order to succeed.

This means you should track all income and all expenses. Then look for ways to increase your income and attack every expense you have with a passion. Here is a free budgeting spreadsheet to get started.

3. Denounce Consumption

This one admittedly takes some time. It will probably be a gradual process, not a single event like when I started saying “no more Christmas gifts“. You may even need consumer counseling to get there.

A general rule: if you want to buy a thing because you think it will make you happy, don’t buy it at all. Things only result in fleeting happiness.

Only buy things that are high quality (should last decades), are absolutely necessary to live, or will creating lasting memories for you.

Our generation feels like we need to buy the latest car, laptop, smartphone, clothes, high-priced vacations, or big homes in order to maintain a sense of individualism and worth in the eyes of others. Clever advertisers have made you feel that way. But nothing could be further from reality.

This change will impact everything else – you’ll be able to pay down debts and avoid them altogether, budgeting will become easy, and you’ll start accumulating the wealth to avoid financial crises. You’ll even be able to downsize your dwelling significantly instead of using it as a pricey storage garage for all the crap you no longer need or want.

4. Keep your Transportation Costs to Less than $1,500 Per Year

Americans spend over $7,500, on average, EVERY YEAR on transportation. THAT IS F#%&ING RIDICULOUS! It is very possible to have ALL of your annual living expenses be under $7,500.

Get a nice bike, take the bus, and use ZipCar or Enterprise when needed. It can be done. At the very worst by a 5+ year old car that gets 35+ miles per gallon.

A car does not, nor will it ever define you. And the new car happiness is very fleeting. The buzz can last for a month, the debt can last for decades.

Wealth Gap Discussion:

What would you recommend to your peers to help us close the wealth gap, or more importantly, help younger generations build wealth?

About the Author
I am G.E. Miller, & this is my story. My goal is financial independence ASAP. If you share that goal, join me & 10,000+ others by getting FREE email updates. You can also explore every post I have written, in order.

  • Jonathan says:

    Most of what you say is spot on…..but your (and our) failure to address the heart of personal compentency is upsetting. Our country was founded on the principal of hard work and a lack of “entitlement.”

    There is no excuse for personal decision. No bank held a gun to anyones head and said “take this innappropriate mortage.”

    People are sitting on wallstreet not because the “system” has wronged us but because they do not have the sense to pursue HARD work.

    The reason under 35’s have financial issues – WE DONT WORK HARD.

    (BTW – I am 26, came from the other side of the tracks, and have a profitable business – WHY? – not because I worked to put myself through college…no. Not because I didnt buy the newest iPad to save $…no. Not because I have worked 12-14 hours a day 6-7 days a week for 8+ years….no. I am successfull because the washinton fat cats and bankers conspired against me…yep thats it!)

    Keep up the good fight G.E.!

    • Sam says:


      I too am 26, just got a masters degree in physics with an emphasis in computation while teaching and doing research to pay my way. I am currently starting my own company at which I work 8-12 hours/day. My girlfriend is in the Air force, works 3 jobs and is working toward a dual degree in mechanical engineering and air-nautical engineering. We both took a weekend to sit on wall street because this financial situation is NOT our generation’s fault. If you believe that our country’s financial situation can be summed up in old-timey platitudes about “today’s kids,” I know a Nigerian Prince who wants to give you a million dollars.

  • Elcobydos says:

    The student loan debt is a killer. I’m in so deep that I could have had a house instead of having to pay back the amount I owe. Nothing else to do but get rich and pay them off….

  • dtf says:

    I agree with Jonathan that we have bred a culture of self-entitlement of varying degrees. I fell into the trap of “just take student loans because everyone goes to college and that’s just what you do.” I graduated at the end of 2008 with an engineering degree, but due to my naivety and careless lifestyle I had about $80k in student loans.

    But I’m here to say that there is hope! I put my nose to the grindstone and cut my spending and started saving (I agree with about everything GE says on this website concerning smart finances-it’s almost exactly what I did).

    In almost three years time I have gotten married (low cost weddings are so much more enjoyable), bought a home (jury’s still out whether or not that was prudent for where I live), and managed to pay off over 60% of my student loan debt (that’s $48k)-all on a single income! I also have 401k savings set to employers match and almost a 6 month emergency fund. I plan to be out of student debt in the same amount of time that it took me to graduate and not be too far behind in future proofing.

    Yes sometimes it’s hard not having all the things I want, but I’ve actually grown to not want the “immediate gratification” that I see all of my friends have (and yet they have $0 in savings in any form).

    I can’t help but echo what my parents and grandparents have said: You plow your own happiness and no one is gonna pull your bootstraps for you.

  • BG says:

    In 1940, there were 42 workers for every social security retiree. Today the ratio is 3.3 to 1. It doesn’t matter how hard the younger generation works, because they are vastly outnumbered by the baby boomers heading into retirement.

    The only way the problem could possibly be fixed is to address the SS, medicare, and medicaid entitlements — this is simple mathematics.

    • G.E. Miller says:

      I have no idea how this relates to growing your own net worth. Can you enlighten us?

      • BG says:

        Networth is a meaningless number. It is relative networth that matters. The older generations have the vast majority of the wealth ‘pie’. And they also have a system setup for the younger generations to make continuous wealth transfer payments to them.

        If there is anything that a 20-something should be paying attention to, it is this. The best way for your generation to preserve and grow your relative networth, is to end these wealth transfer payments — which are currently over 15% of your paycheck. This does not even include the massive federal debt that the older generations are sticking YOU with.

  • JB says:

    While I think your comments are pretty spot on, you’re missing something in your first point.

    I have a great job at a great company. I was referred by someone I went to college with, and I’m confident I wouldn’t have been considered for the position without the recommendation.

    Is that worth $90K in loans? No. $10K? Yeah I think so, especially considering the future job prospects my position may lead to.

    It seems at times that you’re so focused on dollars & “sense” that you miss the bigger picture. Spending $50 on dinner out with a friend or colleague, for example, could lead to a job opportunity worth far more than that. It’s not always black and white.

    All in all, I really enjoy your blog and have learned a lot from it! This is just another way to think about one aspect of what you preach.

    • G.E. Miller says:

      Yes, but how can you connect your singular case of fate to a best practice on how our generation can improve their financial stature? Hindsight is 20/20. On the flip side, what if you had worked a year prior to going to school and taking out the loans and while you were at your job, you found someone who later gave you a referral to an even better company? Or met someone else at college that you wouldn’t have met had you started a year earlier? You may have had better job prospects and none of the student loan debt.

  • Dan says:

    I just stumbled upon this blog a few days ago, and I’m really impressed with what you’re putting out there for everyone to read. There are some common, easy, and painless things people can do to improve their own financial situation, but it takes some personal behavior changes to do it.

    I believe in Personal Finance. The few words of advice I think have meant the most to me post college graduation are, “Live within your means”, and what I try to spread to my friends is “Know your Debt”.

    “Living within your means” is all about budgeting, knowing that if you don’t have the money maybe you shouldn’t buy things, and that you should have a clear understanding of how much money you take in, and how much goes out per month, and per year. There lots of free tools and websites out there to make this so much easier. Visibility and understand of your income and expenses can go a long way.

    “Know your debt” is about managing your current debts, whether it’s a car loan, student loans, house loan, or even just your credit cards. Know that you can make a higher payment every month and pay hundreds to thousands of dollars less in interest over the life of a loan. ($20-$50 more per payment goes a long way). One of the most eye opening tools that can be used to understand a loan is an Amortization Schedule. If you don’t know what that is and you have a loan, I HIGHLY recommend you do some research and run an amortization schedule for any loan you have. You might think twice about that cup of coffee from Starbucks knowing that you might be paying $3.20 per day in interest on your student loan or car loans.

    I have a Corporate Finance degree, but I ended up in IT/Software field right out of college. You don’t need a Finance Degree to do what G.E. recommends just a little patience and the realization that the numbers are telling you things, you just have to listen.


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