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Hey, guys. It's Chelsea from The Financial Diet. In this week, we are talking about a subject that I think is incredibly important to address when it comes to giving and receiving financial advice, especially for people in my generation, millennials, or even you younger Gen Zs.

You scare me a little, but I got to look out for you. Generally speaking, the kind of advice that most of us grew up listening to and comparing our lives and progress against are, frankly, completely outdated. Often, we're talking about receiving advice from our parents, many of whom might have grown up as part of the baby boomer generation, and who came of age in a completely different economic world with totally different opportunities and who, in many ways, feel that these same opportunities should be just as accessible to us, and therefore, just as achieved by us, even if that's totally not true in practice.

And it is because we are being held to these standards of a world which no longer exists that we are constantly drowning in all of that rhetoric around young people just being bad with money because we love spending money on pronoun lattes and buying participation trophies. The entire concept of adulting even is all about fitting into this lifestyle which is no longer really achievable economically for most young people. So it's important that we remind ourselves that we are not somehow magically lazier or less productive or less conscientious than previous generations.

In fact, it's often the opposite. It is simply that we are playing a game where the rules have changed, but the goals are still the same. So here, without further ado, are six pieces of common financial advice that are completely outdated.

Number one, "college is the ticket to a well-paying job." No, it isn't. Over the past 30 years, getting a four-year degree, or even more than that, has gone from a pretty solid decision for individuals who are looking to open their career prospects and even ascend in class status to, in many cases, a fairly predatory institution that leaves young people in debt with vanishingly small opportunities for a lucrative enough employment to justify all the money they took out. Because for students at private universities, the yearly cost has ballooned to an average of $51,690 per year.

In 1971, by contrast, this was $2,930 per year. This means that the average cost of going to college has increased by as much as 2,700% in some cases, or about 4.6 times the rate of inflation during the last 50 years. Now, you have probably heard some boomers in your life talk about how they paid their way through college while sweeping the floors at the hard work factory.

And the thing is, that is likely true if they're saying it, because that was economically possible at the time. College was priced in a way that most people could afford to actually pay for it themselves, pay for their children, or work while going to school in order to offset the cost. But with these ballooning college costs, the average person seeking even a bachelor's degree is left with mountains of debt because the price of college is no longer even remotely pegged to a price point at which the average person could expect to be able to pay for it out of pocket or work their way through it.

And this is coupled with the fact that the value of the actual degree itself has vastly declined, as we've seen in saturation in degree holders competing for entry-level jobs. It's not uncommon to see entry-level or even minimum-wage jobs now requiring master's degrees, and this simply was not the case in previous generations-- but more on that in a minute-- and this has made it so that the actual value of a degree itself, in terms of what it promises in the job market, especially when compared to the chaotic amount of debt that it necessitates, has plummeted to where it can no longer be considered a universal golden ticket to a different economic class. According to entrepreneur.com, a college degree isn't the steppingstone it once was to a better job and a better life.

In fact, studies show that while less than 20% of college graduates leave campus with a job, a staggering 80% leave buried in debt. And yet, every spring, 18-year-olds around the country are being fed the narrative by basically every authority figure in their lives that a four-year degree is the primary, if not the only, ticket to the kind of life they're probably dreaming of, or even just, honestly, basic financial stability. And with schools increasingly seeing the enormous profit that can be made by giving students the college experience, basically, everyone encouraging high school graduates to go to college is either operating on outdated information or they're actively preying on the fact that the average 18-year-old does not know that it is sound financial decision making to take out a mortgage worth of debt in order to drink grain alcohol in a basement with some of their friends.

But where these students are not wrong is that it has become basically a necessity to have a degree in order to just enter the job market. With all of the inflation of degrees happening, even having a bachelor's degree sometimes is not sufficient. So even if paying through the nose to have that campus experience, especially all four years rather than starting at a community college, is, in many cases, unquestionably a bad financial idea.

The idea that now we can just reject college and still expect the same job prospects is pretty naive as well. We've basically locked ourselves into a situation where young people are forced into a bad economic prospect in order to have a fighting chance at a job that doesn't pay them enough, which brings me to my next terrible piece of advice, which is to "get in at the ground floor of a company and work your way up." So the idea used to be that you would throw your high school graduation cap in the air and then, still wearing your gown, you would walk across the street into an advertising agency and you'd be like, I would pay to sweep the floors here. And they're like, well, here's a broom.

And you start sweeping. And then 30 years later, you are the CEO of that advertising firm. And as crazy as it sounds, that kind of a career trajectory wasn't all that uncommon.

Obviously, it's an exaggeration, but it used to be not at all the norm to require four-year degrees for every job. Actual training on the job, as opposed to these unpaid internships or expecting people to already magically have all the training as they enter the workforce, was the norm. It was considered a part of your career development to learn on the job.

In fact, things like unpaid internships have skyrocketed in the past few decades when companies realized it was a lot more profitable to make people pay you to get job experience rather than you paying them for doing the job at an early level. But basically, now it is impossible to get these entry level jobs without this prior experience that you basically can only get through exploitative, unpaid internships. And even many of those jobs will only pay minimum wage, which we'll get to in a minute.

But even if you're able to get your foot in the door at an organization, the idea that you can stay at a company for decades and be handsomely rewarded is completely false now. And believing that that's how you should still be thinking about your career is likely actively hurting your earning potential. Basically, for most people, in order to realize larger raises, increases in compensation, and promotions, you're going to have to move to other organizations.

And especially, if you followed this get-in-on-the-ground-floor advice and started at a company at an entry-level position and are still working there many years later, it's likely that you're earning well behind what you actually should be earning based on industry averages. Because the raises that you've gotten over the years have been based on that very low, initial starting salary. So even a 10% raise is still pretty small in the scale of things.

Now, at the end of the day, sometimes there are excellent companies that still provide things like great pensions or who actually do promote you and increase your comp in a way that's commensurate with what you would be getting elsewhere in the industry, but the idea that this is how people should approach their careers or that it's realistic anymore to think that you can start by sweeping the floors and end up the CEO and never have to get any kind of formal training outside the job to do so is just simply no longer a thing. But speaking of entry-level jobs, many of which paying minimum wage, one of the other terrible pieces of advice is "no one is above working a minimum wage job." Now, if there is one thing boomers love to talk about, it's how everyone should take a minimum wage job "flipping burgers--" I don't know how many people in this country we need to be flipping burgers, but that is what everyone is apparently supposed to do at some point. Because it builds character and, more importantly, nobody is above those minimum wage jobs, and you shouldn't be looking down your nose at them.

And the fact that young people do and are quitting these exploitative jobs en masse is just a sign of our decadence and self-indulgence. But here's the thing, the idea that no one is above a minimum wage job is actually completely the opposite of true, because everyone is above a minimum wage job, because minimum wage jobs don't pay enough for people to live. In fact, the federal minimum wage in the United States is currently $7.25.

This is meant to be a living wage, but it isn't the case in practice. The hourly rate hasn't kept up with the cost of living since the late 1960s. Back in 1933, five years before the minimum wage became law, then-President Franklin Delano Roosevelt said "by living wages, I mean more than a bare subsistence level.

I mean the wages of a decent living." And the first US minimum wage was implemented in 1938 as part of the Fair Labor Standards Act. Today, full-time employees earning the federal minimum annually pocket just $15,080 if they work 40 hours each of the 52 weeks in a year, placing them well below the $18,310 poverty line in 2022 for families of two. And minimum wage earners with families of four fall $12,670 below the poverty line of $27,750.

In fact, in almost every state in the country, there is nowhere that you can work a full-time, minimum wage job and be able to afford a two-bedroom apartment. So the entire idea of a minimum wage, the idea that it is a minimum wage that allows you to have a decent standard of living, is totally false. This is no longer the wage that we're talking about.

What we're talking about in practice is poverty wages, wages that guarantee that the person earning them, even if they work full time every single week of the year, which is what these bootstraps boomers want you to be doing, will not be able to get by. They will be under the poverty line. So the entire game has shifted from saying, OK, this is your starting wage that will set you up in life and from which you will build, to this is a wage that will prevent you from even being able to live normally.

But again, depending on how old these people are, back when they were working a minimum wage job, it may well have been enough to support them in a basic quality of living, because the minimum wage was pegged to the cost of living up until, again, about the late 1960s. So if you are being faced with job prospects that expect exchanging 40 hours a week of your life for being guaranteed to live in poverty, you are not a bad or selfish person for saying F that noise. But back in the day on that sweet, sweet minimum wage, they were doing things like buying starter homes, which is a concept that sounds incredibly foreign to most people my age and younger, but is still very much heard in that time-honored advice of "you should buy a starter home as soon as you can." So here's the thing.

The idea of a young, idealistic couple getting themselves a teeny little Cape Cod or a ranch-style home in a nice little suburb and fixing it up over the years while wearing overalls and then finding out they can't have kids but then having a life of adventure anyway until the woman passes away and then the husband has their last big adventure solo with a small boy scout and a large tropical bird named Kevin, is just no longer possible. In fact, the idea of starter homes as a concept has largely been decimated for much of the population for a few key reasons. One, stagnant wages are largely insufficient to enter most real estate markets.

Two, home prices have been increasing, often well outpacing inflation. And three, a general refusal of cities to build more high-density, affordable housing to expand the housing stock. And the bigger problem, which really speaks to the most inherent internally inconsistent, winner-take-all, zero-sum principles that underlie so much of this boomer financial advice since, I guess, maybe the Reagan era, is the very idea that these homes are supposed to be these insanely good investments.

So let's unpack that. The idea that homes are always these incredibly good investments because you're always able to find new people to buy in at a much higher price, which is something that is currently underpinning a massive amount of boomer retirements right now, either through sizable home equity or selling primary residences in the seven figures which they bought for $0.25 when Nixon was president, could not, in theory, just scale forever. Because basically, in order to keep finding a ton of people who will buy your home for a ton of money and making sure to keep the housing stock as low as possible in order to keep said value of your home high, you create a zero-sum game, and/or a situation in which the new owner is then required to pass that cost off exponentially to the next buyer in order to make their investment pay off, I guess until all homes cost $1 billion.

But at the end of the day, boomer financial security depends on houses being expensive as hell. But the millennial and Gen Z ability to participate in the real estate market and get those, quote unquote, "starter homes" depends on these homes being not expensive as hell, or having a lot more homes built which will end up with the same effect. Homes should generally build equity over time and be some part of a healthy financial life for people, but they can't be these magic bullets that are increasing astronomically in price while simultaneously refusing to build more homes that would allow younger and lower earning people to enter the housing market.

You can't have both, at least not in most major housing markets across the country. In any case, if you are feeling like you're a bit behind where you would want to be when buying a home, trust that it is likely not because you like buying lattes too much. Number five, as a child-free queen, is definitely one of my favorites, and that's "if you want kids, you should have them." Now again, this is personally not my journey.

And there are, I won't lie, many benefits to being one of those dual income, no kids couples. But outside of people like myself, there is a massive phenomenon in my generation and that below me of people who want to have kids and very truly cannot afford them or people who feel that it's not even an option that they should bother considering because it's such a luxury to have kids today. And part of this is, yes, once again, that that ding-dang wage hasn't caught up with that ding-dang cost of living.

But it's also because what used to be the foundation of domestic proliferation, where only one partner was working full time outside of the home while the other partner was largely taking on child care responsibilities, is just basically no longer possible for many families. And here's the even cooler part, we've basically all but forced women to join the workforce, even and actually especially when they have children, but then once we're there, we make it as bad as possible for them. As one article in the Huffington Post put it, "having a kid can boost a father's earning power, while it takes away some of the mom's.

Women lose 4% of hourly earnings on average for each child they have, while men earn 6% more. This gap in earnings persisted even after controlling for factors like family structure or family-friendly job characteristics." Also worth noting that in this article, it points out that women are punished in the workplace when they are perceived as prioritizing work over their family, and they're also punished in the workplace when they're perceived as prioritizing family over work. And an interesting fact for me, and by interesting, I mean depressing, is that apparently some of these discriminatory hiring and pay practices even apply to women of childbearing age who don't plan on having children, because the company thinks you're going to change your mind and it's going to cost them money.

This is why I'll never, ever work for a man. And let's not forget, we're literally the only developed country in the world that doesn't have a federally mandated minimum maternity leave, so let's start there. The point being, even for many people, especially many women who would want to have children, the idea that they just should do it or even really could do it is incredibly naive and goes against what is the actual experience, financial and professional, that those women are basically going to be conscripting themselves to.

Having a big family has gone from being a foundation of our economic model to a luxury item. We did it. And lastly, perhaps the most outdated piece of advice of them all, "if you work hard, you'll be able to retire." You absolutely won't.

Not just from working hard, you won't. The idea that being a really good little worker bee for many decades will leave you with the kind of retirement where you get a nice party at an upscale chain restaurant and then you move to a planned community on a golf course in Florida where you spend the next 20 years getting radicalized by Facebook, is just not possible for most people anymore. We live in a time of dwindling pensions, insufficient social security, and rising costs of living which all but guarantee that in order to set up a solid retirement, everyone is basically out there Mad Max Beyond Thunderdome-ing it by managing their own investments.

Now, the good news here is that setting up retirement accounts, contributing to them regularly, and knowing what you need to save in order to get there is actually not difficult at all. It just sounds hard. And if you're looking to learn more about how to invest, especially for retirement, we're doing an awesome workshop very soon about that very subject.

More info on that in the description. But it is going to be up to you to manage this largely, and it is going to be totally outside of how good or bad you happen to be at your job. Figuring out how much you need to retire and figuring out the best way to get there is going to be something that you have to take the responsibility for.

Do I think that this is right or a good system in which we all should be living? No, I don't. But I also think that the advice that you should just focus on working really well and then retirement will sort itself out is what is leading to increasingly high numbers of seniors forced to take on work well into what should have been their retirement age.

Anyway, that was all a bummer. We've sacrificed a lot in terms of economic stability and social safety net these past decades, but you can spend hundreds of thousands of dollars to get a link to a receipt to an ugly picture of an ape, so who can really say which is better or worse? As always, guys, don't listen to that bad, outdated financial advice.

And thank you for watching. And don't forget to hit the Subscribe and Join buttons and to come back every Monday, Tuesday, and Thursday for new and awesome videos. Goodbye.