Should Twentysomethings Worry?

Even though last week was filled with words like "crisis" and "collapse," life continued as usual for those of us who don't work on Wall Street. That includes two NEWSWEEK staffers, Sarah Kliff and Kurt Soller—fresh out of college, decades from retirement and the furthest things possible from econ majors. They knew that they were supposed to be worried about ... something. Should we be checking our 401(k)s? Investing in Lehman? Cutting our credit cards? These are the questions they debated as they tried to figure out what impact a Wall Street collapse might have on Millennials—and just what "Wall Street collapse" means, anyway. Excerpts:

Kurt: So your iPod's broken, I know that. But is now really the right time to buy a new one? Just get the battery replaced.

Sarah: Well, I've had this one for a few years—it has some other issues. Anyway, do you really think what's happening in the financial markets effects whether or not I should be spending $200 on an iPod? I know these are very serious problems that have far-ranging consequences on the larger markets, but I still have a difficult time wrapping my head around how exactly that impacts what I do as a consumer. Since I graduated from college, I've been pretty frugal, contributing to my savings account and my 401(k), and I keep an eye on those. I feel like if I keep doing that, I'm going to be OK. Do you think we should be worried?

Kurt: Yes, I definitely think there's cause for alarm. To be honest, neither of us are probably the best people to talk about the intricacies of mortgage-backed securities nor how those will directly affect our lives. But this whole crisis has me a little bit nervous—should I be saving more? Contributing more to my 401(k)? Not buying iPods? Those are all things our generation is notoriously bad at, and buying things on credit (as I'm guilty of doing myself) is only going to make the crunch worse. When it comes to savings and all that, you're a generational anomaly. After all, you once told me: "I have no problems with money."

Sarah: Not fair! I might be a generational anomaly in terms of savings, but I think there are some things that I'm pretty normal about—and that gives me at least a somewhat reasonable foundation to not be stressing. First, I most definitely do not have more than $100,000 in a savings account (in which case, an iPod would be the least of my worries) so all my money is insured. So, from what I've read, my savings are pretty set. As for all the fluctuations in the market, like you said, we're probably not the most knowledgeable financial advisers. But from what I've been hearing, I should just be playing the long-term game—not watching my 401(k) go up a little, and then down a little, but just keep contributing and not get too nervous. And since we're in our 20s, insurance company meltdowns like AIG's don't seem to have much of a bearing on our lives. I definitely agree that our generation's credit addiction is an issue—but as long as I steer clear of that, aren't I setting myself up for a pretty solid future?

Kurt: In theory, yes, but not if the rest of our generation screws it up. You're right to gloat about your personal financial well-being. I guess it's more of the macro issues at stake here for me. Retirement and the lack of Social Security money is already an issue for our generation-what's going to happen if the government starts using that to bail out banks? And there are the smaller things: if bars, for example, aren't making money from bottle service, then aren't drink prices at bars going to be more expensive? And, not to mention, taxes will likely rise due to this bailout fund. It's not that any of these will prevent me from eating or paying rent, but I'd rather be, I dunno, paying the Apple Store than the U.S. government.