Seeking Fame and Fortune at Any Cost
From USA Today: "'When you open a celebrity magazine, it's all about the money and being rich and famous,' says 22-year-old Cameron Johnson of Blacksburg, Va. 'The TV shows we watch -- anything from The Apprentice where the intro to the show is the 'money song' -- to Us Weekly magazine where you see all the celebrities and their $6 million homes. We see reality TV shows with Jessica and Nick living the life. We see Britney and Paris. The people we relate to outside our friends are those people.'"
Oh, Big Brother.
According to a Pew Research Center poll, 81 percent of 18- to 25-year-olds say getting rich is one of their generation's most important goals and 51 percent said the same about being famous.
Beyond the untouchable celebrities in the fields of entertainment and sports are the everyday folks who are becoming celebs thanks to reality TV and the Web. MySpace, YouTube, Facebook -- these sites allow average Joes and Janes to become overnight sensations, whether by showing skin, stupidity and lack of sanity. As do reality shows like The Real World and Jackass. In a world void of mass media, many of these folks would be relegated to the role of village idiot, peddling their take on humor or sex at the next subway stop, hoping to wrangle a few nickels out of people.
But in a world consumed by information and multimedia, in a world where skin, stupidity and lack of sanity are heralded, in a world where William Hung could top the Billboard charts, the village idiot reigns supreme. For the village idiot has no shame and seeks fame at any cost. Why? Because if fame is attained, the cost paid is much less than the amount made. Look at the bucks and popularity some 15-minutes-of-famers have spun out of stardom on reality TV, on MySpace, on blogs.
Now, if only we could (more)
Real World Financial Planning
From Quarterlifer's Companion, by Abby Wilner and Cathy Stocker
Many graduates leave school with the idealistic and romantic goal of making the world a better place and finding a job they love to
do. However, it doesn’t take long for most of us to realize that there really is something to the size of a paycheck. In grade school and high school, the allowance or money we earned from part-time jobs was likely to be extra spending money for clothes,
music, or movies. In college, we spent the money that we earned on beer, clothes, our cell phones, or Spring Break. Some of us lived in dorms where we did not have to worry about paying the rent,
phone, or utilities every month. Many of us were on meal plans so we never thought about grocery shopping. And we were still eligible for our parents' insurance plans.
College offers a fake sense of financial security. Because
someone else is usually footing the bill, whether it is your parents,a scholarship, or Stafford loans, for four (or more) years,
you may not have to worry about paying the utility bill or negotiating a rental contract. Ironically, you can feel more financially independent in school when someone else is paying for everything
than you do when you have graduated and may need to borrow
money from your parents.
When we get our first job, the salary that sounded pretty
good suddenly pulls a quick disappearing act. After taxes, Social
Security, health care, and possibly a 401(k) contribution, the
size of the paycheck you bring home every month may be less
than twice that of your monthly rent. After factoring in bills
and existing loans or debt, there may be nothing left over to
buy a new suit for your first official business meeting.
In the first chapter of Quarterlifer's Companion on Money, we share some ways that you can get organized and hang onto more of the money that you are making. Once we help you figure
out how to save some money, our investing section will help
you figure out what to do with it; our section on debt will help
you maintain healthy credit; and our section on insurance will
help you protect your financial future. We include a sample from the section on investing below.
LONG-TERM PLANNING BEGINS NOW
If investing still seems like a daunting task, listen up (unless you need to recover from debt, in which case do that first): The 21-year-old who contributes his or her maximum allowable Individual
Retirement Account (IRA) amount each year for 15 years
ends up with twice as much in savings as the 35-year-old who also
makes the maximum allowable contribution each year for 30
years. (This example, which is from the Smith Barney Accumulator,
assumes an 8 percent annual rate of return). The person who
started saving at 21 ends up with $1,329,298—even if he or she
stops saving at 36. And the person who started saving at 35 ends
up with $642,596 at the age of 65—even after making contributions
for twice as long! How does this happen? By the wonder of
compounding and tax deferring. The point of this illustration is
to not get depressed if you have not been saving, but rather that
saving even a little now can make a big difference later.
If you are still not convinced, another reason to invest your
money now—although it may be hard to think about retirement
so early—is that we cannot necessarily depend on those
contributions our paychecks are making to the government,
also known as Social Security, to take care of us when we need
them.
If you want to consult with a financial planner, don’t feel shy,
especially if your financial situation has changed and you have
a small lump sum of money [for example, a small inheritance
or a 401(k) plan you are rolling over to a new job] but do go to
someone licensed, someone reputable, and preferably someone
who has been personally referred to you. The brokerage firms
might seem foreboding and only accessible to young heirs and
heiresses who need a fashionable Swiss bank account and access
to the latest hip IPO to match this year’s hottest runway fashions.
And, of course, what kind of financial advisors wouldn’t
want a client roster full of the very rich? But just because you
aren’t earning six figures does not mean that you have to keep
your money in a piggy bank.
Whether you consult with a planner or are doing your own
research and investing, there a few decisions you have to make.
Everyone has his or her own “risk and reward” profile. Some
people don’t want to worry at all about what is happening to
their money and put it into a really safe place like a savings
account or CD. You have to pay for this security, though. The
return, or the amount your investment grows, will be lower.
Some people are willing to invest in something riskier, like a
mutual fund or a particular stock. These investments are not
guaranteed to increase in value, but the growth is generally
higher as a way to compensate you, the investor, for the risk
you took. When you hear the phrase “risk and return,” it refers
to the idea that the less risky an investment is, the less the
potential return. And, conversely, the riskier the investment is,
the higher the potential return (potential being an important
word to remember).
SO WHAT SHOULD YOU DO?
HOW MUCH RISK SHOULD YOU TAKE?
This is the hard part because that is up to you. You have to figure
out what your “risk profile” is. How comfortable are you
with risk? Would you rather put your money in a CD or a government
bond and not worry about it? Are you more comfortable
with risk and willing to invest your money in stocks or
mutual funds?
The other important consideration is when will you need
the money? Are you saving up for a trip that you want to take
next year? If so, you want that money to be safer and less vulnerable to a sudden dip in the market. If you are saving for the
long term, if this is money you are putting aside for retirement,
you won’t have to worry so much about the intermittent ups
and downs in the market.
If you prefer not to consult with a financial planner, or don’t
have a lot of money saved yet, it does not mean that you have
to wait before investing your money. Tom Gardner, co-founder of The Motley Fool, suggests taking
the following first steps:
1. Buy a mutual fund. Gardner suggests going to Vanguard.com
and buying a general index fund. Mutual funds enable you to
own a variety of financial instruments. Simply open a fund
account and deposit money, just as you would into a checking
or savings account. You don’t get charged when you
deposit money so you can continually add a little at a time
without penalties.
2. For the more enterprising person, the person who has done
their homework, Gardner suggests using www.sharebuilder.
com, a Web site that offers portfolio building at a discount.
And what if you are lucky enough to have a 401(k) plan, what are you supposed to do with it? In general, you will choose among a wide variety of mutual funds and your own company’s stock, and
you will have to decide how much of your 401(k) gets allocated to
each fund.
You may want to seek the help of a professional financial
advisor to help you allocate your 401(k), but you may also
be able to find the help you need through your own company.
Ask your benefits officer what resources are available that might help you choose between funds. Whether or not you seek advice
from a professional, here are a few basic guidelines courtesty of
Donna L. Fisher, senior vice president of investments
at Smith Barney:
Don’t assume that a $100 contribution actually costs you
$100 out of your pocket. Remember, your contribution
into your 401(k) is not taxed when you put it in. If you
don’t make a contribution, you will get taxed on that
income. It may be that the amount you put into the
401(k) does not feel that different from the amount that
you had to pay taxes on because you didn’t put it into a
401(k). Wouldn’t you rather pay yourself than Uncle
Sam? The benefits person at your company should be
able to help you figure out what the contribution really
does to you wallet.
In general, do not put more than 25 percent of your contribution into your own company’s stock. You may really believe in your company, but if
things go downhill you don’t want to
find yourself in the position of getting laid off while
simultaneously watching the value of your stock-heavy
401(k) plan slip into the abyss.
Just remember the eggs in the basket rule. Don’t put them
all in the same one, no matter how pretty the basket
looks. Diversifying your 401(k) keeps your money safer
because no investment, no mutual fund, is fool proof. So
spreading your savings around keeps it safer.
For more specific financial planning advice and exercises on everything from deciphering credit card offers to budgeting guidelines to getting out of debt, check out The Quarterlifer's Companion.
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