Financial Freedom Supplied Gratis

I have been very blessed with my family when it comes to the finances of the future.  My mother is both a Certified Public Accountant and Certified Financial Planner.  My father is a farmer who is very shrewd business man and fairly cheap.  The two of them have been saving money for my brother and I since they first got married.  Neither my brother nor I have to pay for any of our schooling, undergrad or grad, ourselves.  This has freed us both enormously of debt after college, which is a great gift a parent can give their children.

Before I was an Economics major I was an English major.  I didn't choose it because I wanted to pursue a career in English; I chose it because I didn't want to come into college earning credit for nothing.  I think this turned out to be a great decision, because, by the time I decided to change majors, I already had accumulated enough credit for an English minor.  So, with little extra effort, I have been able to get a major and minor.  While some see Econ and English as an odd combination, I have been told that this will work to my advantage.  The English skills I have learned (analysis, clear writing, communication) will help me in any field that I enter.

I have a great job here on campus.  Since I am not paying for my own tuition, I have been able to save a lot of this money for my future.  I have an emergency fund building itself, I have a vacation fund, and various investments that I contribute to.  I am thankful to be ahead of the game.  I'm taking a class in personal finance through ACES and I'm learning more and more about what I need to be doing for the future.  

My brother graduated from Illinois in '08 with a degree in Psychology and a minor in Business.  Right now, he is at graduate school at SIUE, near St. Louis.  He has a job lined up already after graduate school, and I'm hoping to follow a similar path.  I don't think he ever believed he was going to get a job right out of school with his degrees, and I somewhat feel the same way.  I do believe, however, that he has managed his situation well.  What else could somewhat want then a Masters and a job right out of the gate?

If the career fair is any indication, most employers look bewildered when I tell them I'm in Economics.  This indicates to me that I am going to have a tough time finding a job that directly relates to my major when I leave school.  I'm okay with this; I've read that college is mostly about showing employers what one's capable of.  One's not necessarily expected to take triple derivatives on the first day.

To fully answer the prompt, I would say that my actions now have set me up for a risk of low income.  However, my actions now have also set me up well in order to deal with this larger risk.  In a perfect world, I'll get a great job and I'll build a stable financial foundation.  In a more realistic world, I'll struggle to find a job and be forced to chip into my savings.  I'm content with this.  I know there are students out there that are in a lot worse situations than I am.  I'm just thankful to have a CPA for a mother, even if her work stories have me nodding off in less than a minute.

Charging an Arm & a Leg with a Bowtie & Smile

I work for University Catering here on campus.  I am a student supervisor, a bartender, or a server depending on my assigned shift.  Catering is a branch of University Dining Services; the other branch feeds students in the dorms.  Dining Services has a head, and then each branch has a person in charge.  There are two levels of managers, and then there are students, like myself.  There are roughly 250 students that work part-time for University Catering.

Working for Catering has really given me perspective about organizations.  I have worked there more than three years, and I have seen the organization work like a well-oiled machine, and I have seen it break down horribly.  One way that it works effectively is in the staffing of events.  There are algorithms that the company uses to do everything from scheduling students to booking events.  For example, an event that has 120 people requires one buffet line.  Any more than 120 guests and there must be two buffet lines.  The same thing applies to bars provided.  If there are more than eighty guests, two stand-alone bars are used.  Less than eighty and only one is required.  This works well because everyone in Catering knows these numbers, so everyone from the chefs to the servers knows always to accommodate for this.

When the organization breaks down, it is a headache for everyone.  The biggest problem that happens involves notes about bookings.  Rooms and events are booked months in advance, and each event is different and includes different specific notes about what needs to be done special.  For example, there may be someone who cannot have dairy in any form, or perhaps the mother of the bride is allergic to a specific common flower.  When these notes are not meticulously recorded and made common knowledge to the staff, problems arise.  I have been to weddings where the bride was allergic to peanuts and the oil the chefs used contained peanuts.  This sort of breakdown in communication causes the most problems for the staff, and those higher up are only chided for such hiccups.  This has made it so there is not too much incentive to be meticulous on the part of the higher ups, while the staff is constantly alert of these problems.

Transaction costs in Catering are the bulk of the costs passed onto the guests.  The food is not made onsite, so there is a transportation fee.  To have waiters serve the food versus a buffet line, a large cost is added.  For special requests that are not standardly available, there is a large cost for the consumers. For example, I worked a graduation for a wealthy family.  The grandfather of the graduate wanted to do celebratory shots of Maker's Mark with his grandson.  This had not been ordered before hand.  To provide the bottle of Maker's Mark, my manager had to phone a truck where the liquor is kept.  A guy had to come unlock the liquor storage, a trucker had to bring it to the event, and a TIPS-trained (legally able to bartend) server had to come to serve the Maker's Mark.  All of this made the bottle cost $112 instead of the retail price of about $32.

The Cost of Opportunism

Both my parents work long hours at their jobs, and they don't want to have to come home at the end of a long week and clean.  So, we have a woman who comes and cleans every fortnight.  She is rough and tumble sort -- it's hard to find good cleaning crews in rural Illinois.  Imagine Sally, from the 90's sitcom Third Rock from Sun.  She brings an assistant every week, and it's often a different one each time.  

One of the assistants took a chance to act opportunistically, and stole a gift card from our house.  I can see her mindset, though; a gift card just lying around someone's house, who's going to miss that?  Most don't even get used!  ($41 billion dollars have gone unclaimed in gift cards since 2005, according to NPR).  I did miss this gift card, however, because I was planning on purchasing something with it the very day she took it!  She later admitted to taking it.

It got me to thinking, though, the main cleaning woman who owns the business has endless opportunities to pilfer from the homes she cleans, but she seems like a really honest woman.  I think in her career line opportunism, very unethical opportunism, would be a rampant problem.  Little things from peoples' homes could go missing with no one the wiser.  I believe that she doesn't because her reputation is at stake, and if she is thought to steal, her business would be ruined.  Word travels fast in a rural area.  "good things come out to those who wait," and those who are honest.

On this campus, I feel that many people have a chance to act opportunistically with their parents’ money.  Many students have credit cards that their parents blindly pay without scrutinizing.  I know of some people that take advantage of this, but one of my friends told me the other day that he never would do that.  He knows it would be easy, and that his parents would never catch on.  However, he says that he feels that it isn't his money to spend on frivolous things.  When he makes non-necessity purchases, he thinks to himself, “Would my parents buy this for me if they were with me.”  With something like Grand Theft Auto 5, probably not.  With something like a colander, yes.

A lot of students do take their parents’ livelihood into consideration, which is definitely the most ethical way to deal with a carte blanche credit card.  I imagine this is because, at this stage in our lives, we start thinking about our parents’ money differently.  When we start paying our own bills, buying groceries, etc., we realize that our parents’ money isn't an infinite supply.  Ethics really starts to take a hold of whether or not youngsters are opportunistic with their parents’ money or not.

Elinor Ostrom Blog Blurb

     Elinor Ostrom (1933-2012) was an American-born political scientist and economist.  She won the 2009 Nobel Prize for Economics.  Her major work involved explaining and complicating the classic economic idea involving the tragedy of the commons.  "It's a problem, it's just not necessarily a tragedy," Ostrom said in a 2009 interview.  "The problem is that people can overuse [a shared resource], it can be destroyed, and it is a big challenge to figure out how to avoid that."  Her research uncover many examples where a shared resource, such as pastures in the Alps, were used by many members of the community.  She stated that modern economists were "wrong to indicate that people were helplessly trapped and the only way out was some external government coming in or dividing it up into chunks and everyone owning their own."  Instead, she argued and showed examples of how by doing something small for the common good, such as building a fence around the entire pasture versus dividing it up helped everyone and contributed to a lack of the tragedy of the commons.  The Guardian writes, "Her work was for a long time considered far outside the mainstream of American political science."