An ethos of saving

Our generation must make conscious efforts to sequester portions of all monetary intakes. For every paycheck, birthday cash gift from grandma, parental allowance and lottery cash-out, it should be our modus operandi to apportion some money, however modest, into a long-term savings plan. At the same time, it is important to realize that a reasonable dose of American consumerism is important to the health of the economy and the Chinese proclivity to save 25 percent of all earnings will come at a detriment to the American financial system. Americans should not stop buying, paying taxes and driving growth in businesses. However, there must be increased conscientiousness of the impending necessity to support ourselves when the government cannot. There is a healthy balance between spending and saving that varies from person to person, but no one can be exempt from thinking forward.

There exist many tools that our generation can utilize to encourage a culture of saving — automatic deductions from future paychecks or lump sum deposits when we enter the post-college workforce, for example. Money can be put to work through diverse methods at varying levels on the risk-reward spectrum, like bank deposits, bond and stock mutual funds, leveraged exchange-traded funds or some combination thereof. While we must let our money work in a reliable fashion, we are also young and can afford to take calculated risks to a higher degree than can our parents — we can still afford to mess up and recover. But what is important is that we begin to think about investing.

From the age of 13, a portion of my bar mitzvah gifts helped me in crafting a well-diversified investment plan that I had to keep track of and alter according to changing financial factors. My parents both work in the financial arena and have instilled in me the importance of letting money work and grow. This process was mostly a learning tool employed by my parents to introduce me to the world of adulthood. But more importantly, it instilled in me the importance of surrendering instant gratification in favor of long-term, intangible benefits. With friends who were buying Game Boy games and candy, this was a hard lesson for a 13-year-old. Especially at the collegiate level, we ought to forego the immediate benefits and look to our futures for our long-term security.

I realize that my parents offered me a unique set of lessons. My mother has a very conservative approach to investing as she deals primarily in dividend-returning blue-chip American companies that grow steadily and in reliably calculable fashions. My father works with young start-up companies and sees riskier, volatile results. Both influenced my choices in investment strategies and helped me conclude that the wisest strategy is a diverse one in which my money could grow, shrink or disappear unexpectedly. However, I also believe that college students can and should learn to be thrifty without such early guidance.

Having hard-earned money also encourages more mature and responsible money management. Small amounts of saving can also lead to large returns that will become increasingly essential for good lifestyles going into old age. If we choose to save and invest now, the debt-related budget cuts to come will not hit us so hard and we will be better able to cope with the taming of American entitlement infrastructure.

Aaron Applbaum is a freshman from Oakland, Calif. He can be reached at applbaum@princeton.edu.