Mar
02
2011

Get comfortable taking risks

By Katie Kieffer

Cliffs of Moher, Ireland. Image copyright Katie Kieffer. All rights reserved.

Cliffs of Moher, Ireland. Image copyright Katie Kieffer. All rights reserved.

Due to the government-induced recession, young people are hesitant to take two kinds of risk: Home ownership risks, and entrepreneurial risks. Today, I will explain the two major instances where young people avoid risk, to the potential detriment of their long-term happiness and financial security.

In September of 2009, the National Bureau of Economic Research released a paper with data compiled from 1972 to 2006 indicating, as Newsweek reports, “one really tough year experienced in early adulthood is enough to fundamentally change people’s core values and behaviors.” Newsweek adds, “…there’s an entire body of research to show that recession babies not only invest more conservatively, they tend to make less money, choose safer jobs…”

Sometimes, it’s a good idea to heed your fears. Like, when you’re standing on top of the Cliffs of Moher in Ireland and peering down onto the rocks below, listening to the surge of waves crashing up against the rocks and the eerie calls of sea gulls circling in the misty air. At times like this, it’s wise to listen to the knot in your stomach and resist any impulse to jump.

"Extreme danger" sign on the Cliffs of Moher in Ireland. Image copyright Katie Kieffer. All rights reserved.

“Extreme danger” sign on the Cliffs of Moher in Ireland. Image copyright Katie Kieffer. All rights reserved.

There is a fine line between a risk-taker and a daredevil. The former does his or her homework and the latter does not. Daredevils do things for an instant rush. Risk-takers consider the odds and weigh their options before trying new things. If they figure they would lose more by not trying, then they go for it. The worst thing young people can do today is walk around in fear. Here are two of young people’s biggest fears:

Fear of home ownership risks

It’s a buyer’s market and young people are choosing to pass up historically low mortgage rates in favor of premium rents. In Q4 of 2010, the home ownership rate plunged to 66.5 percent, its lowest rate since 1998. Home prices have dropped for five consecutive months, reports the Case-Shiller home-price index. TIME Magazine reports, “it could take four to five years for prices to come back up, according to Capital Economics senior U.S. economist Paul Dales.”

Image credit: "Human House" by silent7seven on Flickr via Creative Commons.

Image credit: “Human House” by silent7seven on Flickr via Creative Commons.

Mary Bujold of Maxfield Research told the St. Paul Pioneer Press that young professionals are swiftly buying apartments with monthly rents of $1,000 to $2,000: “There’s more people now in the marketplace that are delaying getting married longer, they’re delaying having children, they’re more mobile, they’re moving around the country for different jobs so they don’t necessarily want to be tied down to a house, especially if there’s uncertainty in the market…”

Still, renting can be dangerous too. If you pay a premium of $24,000 a year on rent, you are also saving that much less for a future home with a yard and more space. If your long-term goal is to fly solo or to have a small, mobile family, then upscale renting may make sense. Otherwise, it might make more sense to take the leap into the housing market.

Fear of entrepreneurial risks

America’s 35 percent corporate income-tax rate is pushing big tech firms overseas. And, small businesses simply cannot afford to create jobs under the pressures of high taxes and Obamacare. Yesterday, The New York Times reported that young college grads are joining the public sector in droves. After fruitless searches for jobs in the private sector, many college grads are settling for government jobs outside of their preferred career paths to pay the bills.

Image credit: "Working from home" by Aristocrat on Flickr via Creative Commons.

Image credit: “Working from home” by Aristocrat on Flickr via Creative Commons.

It’s sad to see young people feel forced to work for the government when it was government policies that started this recession, as I explained here. It’s certainly not for lack of trying that that they can’t find private sector jobs. Highly-educated American youth should still have the ability to pursue their dreams. I would encourage young people to consider turning their dreams into realities by pursuing entrepreneurial paths.

Don’t ignore your unique talents and passions if you can’t start your own business tomorrow.  If you’re not financially capable of starting your own business immediately, you can still get involved and tell your elected officials to vote for pro-business initiatives so that you can pursue your dream more easily down the road. You can also spend your free time building your business. The U.S. Chamber of Commerce offers many online tools to aspiring entrepreneurs.

Encouragement

As a young person, you can feel trapped by an economy that makes it seem harder to take risks. Taking risks is inherently risky, but, being risk-adverse can be downright dangerous. Push your limits like a risk-taker and do your research. Weigh the risks of doing nothing against those of pursuing your dreams. If you need more inspiration, watch this video of young entrepreneurs.

Downtown Chicago. Image copyright Katie Kieffer. All rights reserved.

Downtown Chicago. Image copyright Katie Kieffer. All rights reserved.

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Comments...

  1. Marie Frances says:

    Another great post, Katie!
    Thanks for your well thought-out information. It is great to also have the info you wrote in your last two paragraphs: “Online tools” for aspiring entrepreneurs and the encouraging video showcasing young entrepreneurs!

  2. […] Katie Kieffer, a St. Thomas grad, has blog posts that relate politics to things beyond the realm. You know, into the real world where I don’t delve much. Her post this morning grabbed my attention, because of how true it is in general and for me at this moment. Check it out; see if you agree. […]

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