We are delighted to welcome a new contributor to Vault's careers blog. After a successful career as a Silicon Valley high-tech executive, Alan McMillan wanted to give something back to the generations coming behind him. Seeing many members of his own generation unprepared for retirement, and the difficulties facing millennials in the employment market as they started their careers, McMillan realized that the two were intimately connected: without a life-long focus on their careers and retirement savings, young workers today were no more likely to be prepared for retirement than his own generation. That insight led McMillan to start LearnEarnRetire.com, a company that reaches young adults with critical life and career skills. As can be seen in this first post, McMillan's advice typically touches on a range of issues from preparing for the job search to achieving the dream of financial independence, and is often highly practical in nature. We believe that it will provide a valuable insight for our readers, and hope you will both learn from and check back in for future posts.
By the time you are a senior in college, you have invested 16 years of your life on education, not even counting pre-school and Kindergarten. It is reasonable to ask: Why? What do you want? Not only from college, but from your life.
You have a much better shot of hitting a target with greater efficiency if you have even a general idea of what you are aiming at.
Think about it: Why are you in college? What do you want out of this?
I have asked thousands of college students at campuses all over America this question, and the answer generally comes back like this:
- I want a job
- I want to be successful
- I want to be happy
- I want to do something I love
- I want to make a lot of money
- I want to make a difference
Although these are admirable objectives, they fall far short of a complete answer. I think there is an advantage in getting your thinking up, in being more strategic.
Your parents suck at answering this question as much as you do. When I ask them why they send their children to college, they typically say something to the effect of: "Because I believe they will have a better life with it than without it."
That is true. All the data suggests that chances are far better to become successful with a college education but that answer too, falls woefully short.
College is here as a tool to help you get to a place in your life. You cannot be expected to know exactly what you want, but in general, with room to navigate as you grow, it is empowering to have a more substantial answer.
Again, after posing the question on many campuses, where students struggle to answer this, I take a shot and it is nearly universally embraced.
But first, consider again that with 16 years of education, both students and their parents struggle to answer WHY.
(p.s.: College faculty struggles for a complete answer as well. So does senior academic administration.)
I think that all of that is, at minimum, noteworthy.
So, let me give it a shot. You are in college because you want to:
Secure a lifestyle that makes you feel happy, successful, fulfilled and proud.
This varies for all of us. This is your personal decision to make. Some people want to live more lavishly, some modestly, but the decision is yours.
Make that lifestyle debt free.
You will find that debt is the enemy. Initially, it is often unavoidable, because you are starting with little to nothing. But over your career you must eliminate debt and certainly not take it on unnecessarily. By the time you want to retire you must be debt free. That has to be a goal. Recent data suggest around 28% of people's gross income goes to the mortgage on their house, and another 20% goes to credit cards and short-term debt. That means, once you eliminate those debts, life is half price.
Caution: those Baby Boomers who are retiring are doing so with more debt than ever before. Avoid that.
Acquire enough income producing assets to produce a free cash flow in order to cover your expenses, including the cost of quality healthcare, without you working.
We will dive into these in subsequent blogs but these are in the form of:
- A business
- Real Estate
- Paper (Stocks, Bonds, Mutual Funds)
- Policies (Pensions, Social Security, Policies such as Annuities)
Finally, you want to accomplish this at an age where you still have your health and mobility
Why? Because then you will have the discretionary time, and discretionary money to follow your heart's desire.
How do I know this? Because this is what everyone wants.
Notice I did not say, "stop working." If you want to work, keep doing so—at your pleasure. The aim is to have the time to do whatever you want; to live, to be free.
Unfortunately, most do not get to this state. But the odds are in your favor because you are becoming aware of what you want when you are young enough to achieve it! The caveat on this one is if you become aware and take appropriate action. But, it all starts with awareness.
Finally, the fact that so many struggle for the answer is an illustration that our formal education system is stamping out talent without necessary life strategy, lacking key career/life skills and with little financial acumen.
The answer? Take matters into your own hands:
- Print out those four points and place them over your work area
- Figure out how you are going to get there. If you struggle for the answer, fine, just keep digging for a plan that works for you
- Now get busy
The Baby Boom generation is in trouble. Don't let that be you: dream big, start now, take control.
A version of this post previously appeared on LearnEarnRetire.com
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