Are the Roaring Twenties Still the Defining Decade

Most of us believe that there is a certain age by which a person needs to achieve life’s most important goals. This belief is rooted in the fact that it is the 20s that define whether you will succeed or not.

But is it true that if you fail to make it in your 20s, then you are doomed? Are the 20s still the defining decade?

The 20s is a crucial period which you must use to build skills that will benefit you for the rest of your life. During this period, most young people are free from the demands of education and the influence of others. Additionally, other demands like family are not yet present, giving one ample time to explore life and pursue personal goals.

Let’s explore both the sides of the coin...

A. Why It Is Not the 20s Anymore

Let's first dissect points in favor of the twenties.

1. We Have More Time

The number of people getting into old age is rising steadily. In the USA, estimates show that there are 35 million people over the age of 65 while in 1900, there were only 3.1 million. This figure is expected to rise to 70 million by 2030.

Proving that we indeed live longer, statistics show that being 65 in 2000, you were expected to live for another 18 years. In 1900, however, at that same age, you were only expected to live another 12 years.

old-men

This means we now have more time to pursue our life’s goals. If you don’t succeed in your 20s, you can in your 30s or 40s. And you will still have plenty of time to enjoy your achievements.

Gary Vaynerchuk explains it better in this video that getting old does not mean you are finished:

2. It's The Era Of Knowledge Workers

In the past, most jobs required to be done manually. However, technology has changed all this and machines do the hard work. Currently, most jobs require sitting behind a desk.

Furthermore, we now work much less, averaging at 34 hours per week. Before 1900, however, people in most industries were working for 60 - 70 hours per week.

So even if you spend your 20s without a job, you can be sure that your declining physical health will not be a factor in getting a job in your 30s or 40s. This is an era of knowledge workers, not manufacturing jobs.

3. Family Is Usually Not a Priority

We now delay having families. And there are lots of reasons for this. One has to do with the fact that we now stay in school longer than before.

couple-baby

Research shows that 70% of women born between 1957 and 1964 were mothers by age 30. And that 83% of them had two children by the time there were in their late 40s. But this is no longer the case. Young people are waiting longer to start having families.

4. Parental Support Extending for Longer

Most young people live with their parents after graduation as they look for work. And most parents are compelled to support their children soon after graduation.

A Pew Research Center analysis showed that for the first time in 130 years, most Millennials, nearly a third of them, are living with their parents. All this means postponing marriage and other life’s big milestones.

B. Claiming Your 20s

However, the argument above does not mean you should let your 20s slip by thinking you have another 10 years to waste. You will regret it after your 20s are over.

Karen Lamb Author

A year from now you may wish you had started today.

1. Face Life With a Purpose

Don’t get into a relationship because you want to pass the time, start looking for your soul mate now. Don’t wait until you are 30 to get your dream job, start looking for that job now. Don’t wait until you are old to start a business, start that business now.

This does not guarantee you will find that lover or job now. And it does not guarantee the business will be a success. What is guaranteed, however, is that you will build skills and learn important lessons.

You will know what to look for in a lover. You will know what to do to get a job. And you will discover the kind of work you enjoy. You will also know what to do to make a business a success. All this knowledge will benefit you in the long-term. They may not help you achieve your dream, but they will get you closer to that dream.

Psychologist Meg Jay says, in her book titled The Defining Decade: Why Your Twenties Matter, that 80% of life’s most defining moments happen before age 35. She says by age 35, most have settled on a job or career path. By that same age, most have found a partner who they want to spend their lives with. And by that same age, most are financially stable.

Research from Britain agrees with her. It shows that most people meet their soul mates at 27.

love-young-people

So if you say you will wait until you are 30 to get serious about your life, you are fooling yourself. You risk having most of the defining moments happen later in life or not at all.

2. Use Your Freedom While You Still Have It

As one gets old, demands start mounting. This reduces your options. As a result, you will be forced to settle for anything that comes your way. This means marrying anyone who happens to be there. Accepting any job because that’s the one that will put food on your table today.

If you had been productive in your 20s, you would have had the freedom to choose.

Young people are encouraged to change jobs or careers until they find one they think suits them. If they make a mistake, switching to another job is not so difficult. Having time on their side means they can recover from any mistakes.

career-female

When you are 35, changing a job is not so easy. Thinking of how you will take care of your family while unemployed will scare you.

3. You Have Little Time to Make the Most of Your Body

If you wait until you are 30 to start looking for someone to marry, you are putting your chances of having a baby at risk.

Research shows that female fertility drops with age. And this starts sooner than most of us were made to believe. At 27, women are 10% less fertile than when they are 19-26. This study was done by the National Institute of Environmental Health Sciences in North Carolina and the University of Padua in Italy, involving some 872 healthy couples.

4. You Won’t Change Much After Your 20s

Research shows that personality change slows down as one is nearing his 30s. So if you spend the 20s indulging in reckless behaviors, you may be stuck with an adolescent personality in adulthood.

C. How Not to Pressure Yourself in Your 20s

Still, you may feel the pressure of wanting to achieve all you can while in your 20s. Unfortunately, this may keep you from developing lifelong skills and abilities that may help you later in life.

For example, you do not need to buy a house in your 20s if you can’t. That does not mean you are a failure as long as you spend the 20s figuring how to purchase a house in your 30s or 40s.

As research has shown, success can come at any time. Take these famous examples for instance:

● Martha Stewart worked as a model then as a stock blocker before she found her business at age 41.

● Samuel Jackson, despite appearing in several movies, found real success when he was 46.

● Sam Walton had several small stores before he opened Walmart in 1962, while he was 44.

● Harland David Sanders had several odd jobs before he opened Kentucky Fried Chicken when he was 62.

What matters most is that you keep trying to succeed.

You must forget the notion that we lose creativity or intelligence with age. Of course, this happens, but not as early as most of us think. Previous studies showed that reasoning and knowledge peak at 26, but this study proves that this happens much later. It shows that reasoning, verbal ability, and verbal memory do not peak until in the 50s.

longitudnal-intelligence-with-age1
legend-for-longitudanl-intelligence-150x120

Other studies show that doing basic math and a larger vocabulary also peak in the 50s.

So age is less of a driver to success. Experience, determination, and persistence are most important. Experience usually comes with age. If you don’t have it, you can find it by surrounding yourself with others who do.

Colin Powell Former US National Security Advisor

There are no secrets to success. It is the result of preparation, hard work, and learning from failure.

Further research shows that the average age of a successful startup with over $1MM in revenue is 39.

The problem these days is that the media promotes stories of a small percentage of successful young entrepreneurs like Mark Zuckerberg and Steve Jobs.

Conclusion

Many twenty-somethings believe this decade is about fun, thinking one has to get serious when in their 30s. Unfortunately, this kind of thinking is dangerous – you risk losing the most productive decade in your life.

So try to use this period properly. Pursue the things that matter most to you and don’t sit around thinking a better time will come. If you succeed while still in this decade, then that is good for you. And if you fail, you should still be glad knowing you learned important lessons to help you for the rest of your life.

With that, I would like to hear from you. What do you think about the twenties? Do you believe that success can only happen in this decade?



Contemplating Mortgage: Should You Buy a House in Your 20s?

The time comes when you have to decide to buy or rent a home. Your impulses will likely push you towards buying: nothing is more comforting than the thought of living under the safety of your own roof, free from landlords, monthly rent payments, and other limitations.

Unfortunately, owning a house is involving. In addition, houses are expensive. You need to pay large sums of money at once. Most of us cannot afford such costs.

A mortgage is a bridge between the dream of owning a home and the reality of having it.

But mortgages come with several drawbacks the biggest of which is interest. For example, a $300,000 home may cost you another $300,000 in interest.

With this in mind, is renting a better option? Or do you still save if you take a mortgage?

These questions are difficult to answer, because what’s true in one scenario may be false in another.

In your twenties is when the dilemma of buying vs. renting will first hit you. This period represents the most productive age. It’s also the period with the least responsibilities. So buying a home may seem attractive. But like I said, renting may prove to be the better option in some instances.

Read on to discover whether you must take a mortgage or rent.

Buying vs. Renting

Stuck with choosing between paying for your own house or someone’s? Then here are the factors that will help you make a choice.

1. Cost Consideration

The cost of a house has a huge impact on whether to buy or rent. Your disposable income dictates both of these choices. If you are an expense conscious individual, renting is usually attractive.

Buying a house piles up several costs you need to deal with upfront, and these can be in thousands of dollars. For example, getting a mortgage means you must make a down payment, which can range from 3.5-20 percent of the house cost. Knowing how expensive houses are, this amount burdens most new homeowners.

Apart from the down payment, you also need earnest money (paid to show your seriousness), home appraisal fee (usually between $300 and $500), and several other costs. You also have to recompense the tax amount the seller might have paid in advance. Furthermore, you must pay for homeowner’s insurance, which is required by lenders.

Here is a video by Re Max detailing expected costs when buying a house:

You need to meet all these expenses during the buying process. Research shows they can amount to1.5 times your down payment.

And the costs don’t stop yet. Once you buy the house, a portion of your check will go towards your mortgage. This will go on for 15, 20, or even 30 years. Other recurring costs include taxes, insurance, and maintenance.

Renting, on the other hand, eliminates most of these costs from your plate. You are only required to make a security deposit and pay your first month’s rent when moving into a new house. After that, you only need to worry about monthly rent payments.

If things get broken on rented property, you won’t be responsible for that. Simply call your landlord and your work is done. You don’t need to pay taxes, down payments, or homeowners insurance.

So if you’re after cost saving, renting wins, particularly in the beginning.

2. Building Equity

Among the many ways you can build wealth, real estate has been seen as a viable option. Research shows that with time, real estate appreciates. For example, if you bought a $150,000 home 10 years ago, it would be worth $300,000 today. From 1978-2004, real estate has had an average return of 8.6%.

investing in real estate builds wealth

Even better, when you own a home, you are free to ameliorate it, increasing its appeal and value. A good many people have made fortunes from real estate flipping.

Robert KiyosakiBusinessman and Investor

Real estate investing, even on a small scale, remains a tried and true means of building an individual's cash flow and wealth.

Renting kills any chances of building equity. You can rent a house for over 30 years. But that won’t make it yours. Even if you improve it, you will do it to the benefit of the landlord.

However, you must not ignore reality. Real estate markets fail sometimes. Take the story of Ricardo and Denise Cabrea. The couple bought a $490,000 home in 2005. Owing to the 2006 real estate bubble, the house lost $150,000 in value by 2009.

But the good news is that in the long term, real estate usually appreciates. So even though you may face losses here and there, chances are you will still come out a winner the longer you hold on to your property.

3. Potential for Income

Owning a home gives you an opportunity to earn money from….

Yep, you guessed it right:

Rent.

How?

You live in another house that’s smaller and cheaper, suiting your requirements. And you rent the bigger house that you possess.

Else, you can also rent one or two rooms in the house you purchased.

The rent income may contribute towards your mortgage, tax, or homeowners insurance.

Renting, on the contrary, means you are the one giving away money. In other words, you are helping your landlord pay his or her mortgage. But even if this is so, remember that having a roof over your head will always cost money.

Caveat: Renting comes with high maintenance costs for landlords than if they live in the house themselves. That’s because renters are not usually as careful as an owner would be.

4. Freedom to Unsettle

If you’re a freedom loving person, then renting is a better choice for you. Because you’ll have the mobility to travel to any location. For homeowners, the story is different. They just can’t pack up and leave. What about the house they have spent years paying for?

luggage-packed ready to move

They either have to sell or rent it. Both these options can be long processes that need serious thinking. And if you are materialistic individual, you’ll carry luggage that becomes a hassle to carry.

5. Increasing House Costs

The price of rent has continually risen. So if you choose to rent, know that your expenses will keep on growing. Worsening things, landlords can willfully raise the rent at any time they wish.

Of course, you can always relocate to less expensive neighborhoods. But constantly moving around is a lot of work.

Homeowners with a fixed-rate mortgage don’t have to worry about uncertain house prices. They will pay the same amount until they finish their mortgage. After this, the only costs remaining on their plates will be small ones (tax, insurance, etc.).

6. Security and other Limitations

With renting, the landlord can evict you at any time, usually with only a 30 or 60 days’ notice. If you had become fond of the house, it could become a problem.

Some landlords also impose restrictions. They may bar you from smoking, drinking alcohol, or keeping pets. They may also limit the number of guests you can have at a time. When living on your own property, you don’t have to worry about any such limitations. You can do anything you want as long as the laws allow it.

So, Should You Buy or Rent?

When deciding whether to buy or rent, many only consider financial factors. However, this is a mistake. There are lots of other things apart from the cost that can help narrow your decision. Ignoring these things can lead to costly mistakes.

You should first think of time.

How long are you going to stay in one location?

The longer the period, the better it is to buy. A study by Trulia showed that:

● For families who move every 7 years and can afford up to 20% in down payment, buying is 37% cheaper than renting.

● The study further said that low mortgage rates usually offset high renting rates.

Another thing to consider is your goals. Where do you see yourself in 20 or 30 years?

happy family

Do you see yourself getting married and raising your kids in a certain area? Or do you see yourself settling in an area doing business? If “yes” in both scenarios, then buying may prove to be wise.

But if you know you will be moving a lot:

You may be better off renting.

You also need to seek the opinion of family members if you don’t live alone. This is especially important for couples.

However, this one fact about twenty someones might nudge you for renting against buying...

In your twenties, there are a lot of gaps that need to be filled in your life. You may get a new job at a different place from your existing neighbourhood. So buying a house will put you in an awkward spot.

A study by LinkedIn found that young people usually change about 4 jobs before they are 32. Further, the changes involve unrelated industries.

A study by LinkedIn found that young people usually change about 4 jobs before they are 32.

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Another reason to rent has to do with your knowledge of a neighborhood. Unless you know it well, rushing to buy may prove to be stupid. 3 or 5 years after buying, you may start to hate that area.

But the biggest reason to rent has to do with money. Most young people do not have enough to afford down payment and other costs necessary to close a house sale.

Data from the U.S Census Bureau shows that house ownership fell among millennials. It was 35.8% in 2015, but 39% in 1995. Some of the theories for this include the high cost of down payment and monthly mortgage payments, which leave most young people with less disposable income. It’s also worth noting that unemployment stands at 8% and there is a whopping $1 trillion in student debt.

So for many of you, renting is usually not an option, but a necessity. If you force yourself into a mortgage when you can’t afford it, you will stretch your wallet too far. Your disposable income will fall significantly and you will diet your spending to starvation.

If you want a house for building equity, you still have other options which provide better returns even if you have limited income. In a study by Jack Clark Francis and Roger G. Ibbotson, it was discovered that paper investments, which include stocks, futures, and bonds, give better results than real estate. This study analyzed these two forms of investments from 1978-2004.

The recommendation of paper investments centers on your ability to commit any savings from rent into the already mentioned paper investments. You will emerge a winner than those who buy houses.

Paul SamuelsonAmerican Economist

Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.

Unfortunately, channeling rent savings into paper investments is easier said than done. Most young people are inclined to use any extra income for other purposes. A survey by Harris Poll showed that 80% of millennials haven’t invested in the stock market. 40% claim they do not have enough money for stocks. 34% said they don’t understand how the stock market works. And 13% attributed their failure to invest to student debt.

A survey by Harris Poll showed that 80% of millennials haven’t invested in the stock market.

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However, as research has shown, waiting even as little as 10 years can have a big impact on your wealth. Consider the case of these fictional twins, John and Mary. John invests $10,000 when he is 25 and adds $100 to his investment every month. Mary waits until she is 35 to start investing. She also invests $10,000 at the start and adds $100 to her investment every month.

At 55, here is how wealth they will both be (calculated at a 6% “rate of return on investment” using bankrate.com):

calculating cost

At 55, John will have $155,360.33 while Mary will have $77,635.79, a difference of $77,724.54. As you can see, if you decide to invest in paper investments instead of buying a house, it is crucial that you start right away. The best part is that there are no set amounts as to how much you must invest.

Conclusion

While buying house is usually a wise and satisfactory idea, it is not the only best option. As you have seen in this article, renting may prove better than a mortgage. While owning a house gives security, wealth, and a lot of other good things, you can still enjoy all those benefits with renting. Just know that they will come in different forms.

With that, what’s your take on buying and renting? Which do you believe would be the best option in your case?