Dreaming…

I wrote in a blog several weeks ago about the American Dream. A key theme of the American Dream (or at least what folks think it is) is that the next generation will be better off than their parents. Meaning I will earn more than my parents and my nieces and nephews will earn more than me.

I’m quite sure I earn more than my parents and my 24-year-old nephew is pretty close to earning more than I do, but does that mean we’ve achieved the American Dream? Part of why my nephew and I are better off is because we both went to college and neither of my parents did, nor did my sister. So, our earning power and capacity should be greater because we have more education.

In my case, however, there’s not much else that would prove that I’m doing better off than my parents. I don’t own a house and though I have the ability to own one, my financial capacity is quite limited. Never mind that my dream house, for the most part is out of my reach – though with the help of Emily and Project Money, I’m trying to change that.

I remember driving down the street in Boston when I lived there 12 years ago. I was in the car with a friend, who was also an economics professor at the Massachusetts Institute of Technology. He pointed to a beautiful mansion as we drove by and he said you will never live there.

At the time, I thought, well that’s not very nice and how does he know I would never live there…but the wisdom of a few more years proves that I will never have the income available to live in a house like that. Though, several months after he told me that, the couple that owned the mansion was living in another part of the world and their kids were living there and renting out some of the rooms. I almost rented a room from them just to prove my friend wrong!!!

There’s been quite a bit of research to back up the fact that it’s harder in today’s economy to achieve the American Dream and thus live a more financially secure lifestyle. The PEW Charitable Trusts Economic Mobility Project recently issued a report titled “Downward Mobility from the Middle Class: Waking Up from the American Dream,” and they report that a third of Americans raised in the middle class (considered between the 30th and 70th percentile of the income distribution in our country) fall out of the middle as adults.

One of the main findings showed that both men and women who are divorced, widowed or separated are more likely to lose their middle class status, as are never-married men and women. In fact, women who are divorced, widowed or separated are between 31 and 36 percentage points more likely to fall in economic mobility; and never married women are 16 to 19 percent more likely to be downwardly mobile than married women. The report also showed that 30% of white women fall out of the middle class compared with only 21% of white men. Though they claim the gap between white men and women is unexplained, it’s not surprising given that women are still earning 77 cents to a man’s dollar.

I’m easily an example of those numbers. Though I make a fairly decent salary, I also shouldered all of the expenses of running a household (obviously it’s not as expensive with only one person but there are some bills that you pay where the amount isn’t based on the number of individuals in the household – like cable TV for example). I also have a good friend who is another living example of the numbers. She is divorced with a 19-year-old son in technical college and she’s struggling financially even though she makes what is considered a good salary. But with post high school education costs for her son and a mortgage that she pays on her own, along with general living expenses (all of which have increased) it’s been difficult for her. So, she’s required to work two jobs.  She was raised in an upper middle class family and she definitely does not make more than her parents did.

Issues such as the ones raised in the PEW study are becoming more and more visible as the media picks up on events occurring across the country that draw attention to the income gap between the wealthiest one percent and the remaining 99% of the population. It certainly puts research behind the reality that a lot of people face in our country today and it definitely helps explain why sometimes I feel financially insecure despite a steady job (two actually) with a steady income. I’m a true believer that you have to live with hope – it helps us achieve our goals and dream our dreams. There’s also reality that helps put things in perspective.

One of my big goals as part of Project Money is to live my life in balance. There’s a balance between hoping and dreaming about a better life and living in reality. It’s great to have hope and dreams and it’s also good to be realistic and content with what you do have. It’s true that a lot of individuals who had too big of dreams and not enough perspective on reality got into big financial trouble when they took out mortgages so they could live in their dream homes but didn’t have the income to support that dream.

Project Money has definitely helped spark more hope in me and I believe more now than I ever have that I can achieve my dreams even within my budget. But Emily has also been a very good reality check – because numbers don’t lie!! I think more people could benefit in finding the balance of dreaming and living life within their means.