“Everyone thinks of changing the world, but no-one thinks of changing himself” – Leo Tolstoy.
It’s an interesting quote. If you stop to think about it, the world is going to change whether we like it or not. It always has done, and it always will. The key question is whether we can learn from the changes of the past to make for a better future.
The wartime generation lived through times of great uncertainty and high inflation. People tended to be family-focussed and had many admirable attitudes. Folk showed spirit in the face of adversity, did not ‘air their dirty washing in public’, they had a make-do-and-mend attitude and frowned upon the idea of instant gratification.
Most tended to live within their means and frugality was the order of the day. They believed in the old phrase: ‘neither a borrower nor a lender be’.
The wartime generation were confident in themselves but mistrusting of authority. People ‘knew their place’ and in times of such instability, were unlikely to invest for the uncertain future.
The Baby Boomers are society’s bottleneck – there are just so many of them aiming for the same place! They wanted prestigious job titles and the corner office. The idea of a job-for-life was still pervasive and switching careers was far less common.
The Baby Boomers were also known for having more freedom. They were sometimes more hedonistic and, some of them at least, had great social skills.
But there was also a live-for-today attitude. Baby Boomers had seen parents and friends die in wars. People became less afraid of debt.
Back in England in 1982, I can remember the adverts for Access credit cards becoming ubiquitous – “your flexible friend!” – I was too young to understand what it all meant, but they certainly seemed to be friendly little characters, didn’t they? Consumerism boomed.
Car loans became perfectly normal too. Why save for something when you can have it today?
Governments, by and large, have taken a similar viewpoint, taking on huge debt to pay for wars, pensions and social security. In fact, the Welfare State is generally regarded to have emerged at the end of World War II in 1945, to reflect the findings of Beveridge’s 1942 report in the UK which idealised ‘security from cradle to the grave’.
The Baby Boomers were inexperienced and largely uneducated as investors. Some bought shares as part of government privatisations of utility companies (in the UK, this meant British Gas and British Telecom) in the 1980s, but most investors had portfolios that comprised of their house, shares in one or two privatised floats and nothing else. It was all about the pension.
Today the pension system has radically changed. With people living longer, the generous defined benefit pension schemes are largely a thing of the past for Generation X. Today, we have defined contribution or accumulation funds. What this means is that it is up to us whether our pension balance is healthy enough at the date of retirement, and not our employers.
What else has changed? Well, today women can do it all too. Women can be the top business people and the best investors if they so wish. Half of the human race need no longer hit upon a glass ceiling in their careers, though some would certainly argue that women have had to strive for greater excellence to achieve the same goals as men.[sam id=35 codes=’true’]
Generation X-ers want more freedom and often the freedom from being controlled by a boss. Many of us had distant parents and are often unsure as to whether to have children ourselves. What Generation X-ers definitely need to learn is that superannuation funds and the Age Pension are unlikely in themselves to provide for a wealthy retirement. We need to take control of our own destiny.
The Census of 2011 shows that we are also less likely to identify with any one religion than those of decades gone by, though we are not necessarily any less spiritual. Charitable giving is still seen to be a worthy endeavour, though, interestingly, perhaps a little less so in Australia than elsewhere (I believe that this is changing as we mature as a country).
Generation Y and the Millennials
Generation Y and the Millennials (those entering the workforce today) are far more technically savvy than any generation has ever been before. The younger generations often have great self-belief and little fear. Information flows fast, people become famous and infamous overnight (and they often want to be), and people can change jobs even faster.
Millennials have the spending power (of their own and their parents’ money!) to shape the future of world economies. There are more of them than there were Generation X-ers, and they are the largest generation of young people since the Baby Boomers.
Seven lessons we can we learn from all of this
1) we need to take control; relying on the pension or our super fund will not be good enough
2) today, we can ‘better ourselves’, and the route to doing so is education
3) we should learn to live within our means and embrace delayed gratification
4) a sense of community and charitable giving or tithing is a good thing
5) carefully-managed, serviceable debt for investment is not to be feared – indeed it can be greatly beneficial to the smart investor
6) the world is a smaller place and a more fluid place (for example, we can invest in overseas shares and emerging markets for diversification, or we can easily invest in investment properties in another state that is slated for capital growth)
7) freedom of access to the internet, libraries and bookstores, if well used, can educate us and provide the tools for us all to invest safely and successfully.
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