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Financial Literacy

Financial Literacy

Home Financial Literacy Retirement Life According to the Middlesons

Life According to the Middlesons

Mom and Dad Middleson first laid eyes on each other during a college basketball game. Mom was fully covered in red body paint and Dad was dressed as an overweight Spartan but somehow they still fell in love. After college Dad scored a job as a product salesman for FatandSugarinPackaging Inc and Mom got a job hiring and firing people called human resources. They bought to a house in the suburbs and started popping out the little ones. Already they had two sets of financial shackles tied around their limbs (hint: not the kids…yet). One was their new mortgage and the other was the student loans. Unless Dad Middleson pulls a Houdini and takes a key out of his tighty-whities to unlock the shackles, they won’t be saving for retirement for a while. They plan on saving for retirement later on when their debt is paid off and retirement is so close that they are practicing their shuffle board skills already.

Does this retirement strategy sound good to you?

We bet that the concept of sitting around doing nothing all day – or at least not doing something productive like homework – is one of the furthest things from your mind right now. In this little missive we hope to convince you that it shouldn’t be. And we don’t just mean YOUR retirement.

As with all things Shmoop, let’s start with a little base case story.

You’re in high school, maybe early college years. Odds are roughly 50 50 that your original parents are divorced; and odds are good that one parent has remarried and that new family has kids who weren’t baked in the same condo that you were, nigh 18 years ago. The undertone here is that Mom and Dad likely have numerous mouths to feed and that money is likely less plentiful for you than it is for teens in Abu Dhabi (Arab oil city overflowing with wealth) or the lil’ Lil’ RichyRiches. You’re parents are typical Middlesons.

The typical Middlesons will likely have finances looking like the following:



Two Cars

401(k) from work (stay tuned for the explaination later)

Mutual Funds (A bunch of stock and bonds managed by another dude…more later)



Low Interest Savings


A Danish that looks like a religious figure



Student Loans (hopefully not)

Bank Loan for renovation

Car Loan

A Little Credit Card Debt (small but deadly)


Combined Salary of $95,000 per Year
Combined Savings of $6000 per Year Provided by Work

Some mathy thoughts:

It is highly likely that you will need scholarship money for college, either in the form of grants or loans. Mom and Dad Middleson will pay for a chunk of it; hopefully you have a grandparent or two around (not trying to live on their $282 monthly social security check) to kick in a few bucks as well.

The truth is that getting da green for school can be the hardest for the middle guys…and gals. The kids with a golden fork (or some other utensil) in their mouth can just get rich Mom and Pop to foot the bills. On the other side of the tracks, college entrants from low income families can often get government funding or more grants.

Access to mommy’s platinum credit card or Uncle Sam’s checkbook will come in handy, just check out the numbers. The College Board reports that the average cost of tuition, fees, room, and board at a four-year in-state public college is nearly $20,000 per year. The situation gets worse for students attending private colleges where the average cost of attendance is just over $39,000 per year. The icing on the financial-doom-and-gloom cake is that these numbers are just a starting point. College costs increase, on average, about 8 percent each year, meaning that the price you will pay for your last year in college will probably be significantly higher than the one you paid during your freshman year. Lets whip out the old calculator…four years at in-state public college with tuition rising 8% per year will cost a staggering $90,122! Now to make you cry…four years at a private college with tuition rising at 8% per year will cost…$175,738! That’s a lot of flipping burgers!

The basic idea is that you’re going to be broke for a while. More than broke if you enroll in a private school.

And more to the point, Mom and Dad aren’t going to have much if anything left over in savings after they have paid for your college and the legion of siblings, step-siblings and other non-you people to get schooled and ready for life.

If your parents can muster up 10 big ones and you go to an in-state public school, you will still have about $80,000 in student debt to battle with. Ouch! So unless you get that CEO job straight out of school or build the next facebook (maybe Snoutbook…like facebook but just for Rover and the gang), you are going to be paying that debt down for a while.

Let’s hope that by the time you are 50ish, you have finally finished paying for schools and at that point are at least fully out of debt mode and are putting away extra savings for retirement.

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