Can You Afford the New American Dream?

By Katy Song, CFP®

Gone are the days of working for a company for thirty years, owning a home, sending your kids to college for almost nothing, and retiring with a healthy pension and free healthcare. For most of us, our grandparents were the last generation to experience this, and our parents have likely built their own wealth or may even be struggling due to the "Great Recession" of the late 2000's.

So what is the New American Dream? I recently saw Suze Orman speak on this topic, which is in her new book "The Money Class", and she defines the American Dream that is somewhat universal and includes providing for our family and keeping them safe, as well as giving future generations even more opportunity and advancement. She argues the old American Dream is dead, and that it is time to envision our own New American Dream rooted in reality and truth.

Suze Orman can polarize any group of people... you either love her or hate her, but I think she has a point. The American Dream has always been about opportunity, and it seems that our generation has focused more on striking it rich quick than putting in hard work. It is easy to get swept up in a feeling of entitlement when you see 24 year-olds worth millions of dollars because they work for a start-up tech company. We also live in a very affluent part of the country and cannot help but notice shiny new cars and big houses with sweeping views of the bay. When you are surrounded by wealth, it is easy to covet what you do not have and ask "why can't I have those things?".

Here's the good news. You don't have to move to a third world country to appreciate what you have; You can change your perspective and create your Dream right here in Marin.

Step One: First, determine what matters to you most. What are your family values? I recommend sitting down separately and circling the words that resonate with you most (if you don't like any of these words, you can add your own). Then reconvene with your partner and see where you overlap. Together, you can decide on your family values.

Adventure • Balance • Change • Community • Education • Experience • Faith • Family • Fun • Generosity • Harmony • Inner Peace • Lifelong Learning • Mobility • Opportunity • Personal Growth • Pleasure • Presence • Prestige • Prosperity/Wealth • Reliability • Respect • Security • Simplicity • Travel • Variety • Well-being

Step 2: Once you know your values, you need to make sure these coincide with your goals. For example, if security is one of your values, you want to have a plan to be debt free and make sure you are saving enough for an Emergency Fund, college and retirement. If experience is one your values, look at your spending to ensure that you are setting aside funds for travel or hobbies instead of buying stuff you don't really need.

Final Step: The next step is where the hard work comes in. You need to create a plan for how to accomplish your goals and live your dream, and most importantly, you need to have the strength and resolve to stick to your plan! Getting distracted by pretty shiny new things is easy. Whenever the impulse to stray from your plan takes over, remember your family values and your dream. Think about what a wonderful role model you are for your children when you stand strong and make responsible decisions!

Recently, my husband and I talked about how great it would be to add a master bathroom to our house. We day dreamed about soaking tubs and discussed how much value it might add to our home. However, neither one of us spends a lot of time in the bathroom, nor do our 4 year old and 3 month old. Finally, we looked at our list of goals for the next few years and adding a bathroom was never mentioned. Since it wasn't on our list, we let go of the idea (and potential cash outlay for it). It felt liberating and helped strengthen our resolve to focus on what matters to us most.