Ain’t it fun? Living in the real world. Ain’t it good? Being all alone.
Those lyrics are sung sarcastically in a hit pop song, “Ain’t It Fun,” by the band Paramore. I was struck when I heard the song on the radio recently, as the lyrics really bring to the forefront what a struggle it can be to be “on your own, in the real world.” Those sentiments are not usually what you hear in a popular song, but highlight this time of year as young people graduate from high school and college.
My friends and I in the middle-aged crowd frequently reflect on how difficult the world is now for the generation coming out of college. It’s harder to get into college, and once you’re there, it’s astronomically expensive. Once you’re out, it’s harder to get a job in the post-2008 economy, and many young people have debt that may seem insurmountable given their age and income potential.
The Paramore song continues on with the lyrics, “Don’t go crying, to your mama, ’cause you’re on your own, in the real world.” In this case, I beg to differ.
For those who feel responsible for young women college grads, don’t despair if your kids are not ready for “the real world” — help them take action. Here are a few areas to focus on with your college grad to help her live in the real world:
- Job negotiations — Studies show that female college graduates still under-negotiate their male counterparts, and this can cost a woman, by some accounts, half a million dollars over a lifetime. Work with your daughter to help her understand how to negotiate her first salary effectively to ensure a strong foundation for future earnings.
- Saving for retirement — It can be hard for 20-somethings to imagine a time when they are too old to work. However that day will come. Due to the power of compound interest, the earlier they start saving for retirement, the faster and larger their savings will grow. Encourage your daughter to find out about her employer’s 401(k) plan if one exists, and other IRA options if not.
- Debt management — Many young people are graduating from college with significant debt. If this is the case for your daughter, it is important to help her take action in understanding the debt she is responsible for. She needs to understand the terms of her loans — the principal amount, interest rate, term, and any special components of the loan. Given the current low-interest rate environment, she should also make sure that the loans have the lowest interest rate possible.
It can be fun — and empowering — to be “on your own, in the real world.” Financial independence is possible for young people even in today’s challenging economy. And if your daughter is not ready for the real world, you can help her get there.