Risk Behavior

In class, we talked about how younger people typically are more tolerant to risk than older people. I have an older sister who is twenty-seven years old and, while she has only been in the work force for six years, I think that her actions involving financial risks have echoed this theory rather consistently.

My sister was advertising major here at the University of Illinois. She graduated with high honors in her major, but I don’t think that anyone that goes into advertising expects to make tons of money, especially when they are just starting out. When my sister graduated college, she had an internship with a small healthcare advertising firm in a Chicago suburb. This was the first job that she had that was relevant to her major. After that summer of interning for the company, she was offered a full-time position and has been there ever since.

For the first two years after graduation, my sister lived at home with my parents so that she could save up money to live in the city. This technically would be a risk adverse thing to do, but I honestly think the only reason she stayed home is because she wouldn’t have been able to live otherwise with the money that she had saved up thus far. My sister thought that after two years of saving, she had enough money to move out so she moved into the city with one of her friends. When she lived there, she seemed to be living the dream life. From the outside looking in, I saw my older sister whom I had always looked up to living in this great neighborhood in the city in a nice apartment with her best friend and was constantly going out to eat and shopping. This was the life that I have aspired to have since I saw her achieve it.

It wasn’t until recently, however, when my sister moved out of the city and into an apartment in the suburbs with her fiancé that I realized that life wasn’t as perfect for her as I had made it out to be. While she was living in the city and doing all the things I just described, she wasn’t saving any money during the two years that she lived there. My sister shared with me this summer that it took nearly her entire paycheck every month to live the lifestyle that she wanted in the city, and that while she misses living there, she is so happy that she is finally saving money, because she is in that place of her life where she is thinking about marriage and buying a home and having a family.

When my sister first told me that she went two years without saving anything, I was a bit taken aback because I couldn’t imagine living like that. The way my sister explained it, though, is that that was going to be the one time of her life to live in the city with her best friend and not have anyone else depending on her, so she wanted to have the full experience and do whatever she wanted. She was willing to do so even if that meant working overtime now and saving all of it so that she’ll have money for a wedding and a down payment on a house. Now, even though my sister has a much smaller cost of living, I hear her saying things such as, “I can’t afford that,” because she knows that she has some ground to make up. I think that this scenario of my sister almost perfectly exemplifies the theory that younger people are able to tolerate risk more than older people. I was able to see this transition in risk even within just a few years of her being in the job market.

Being able to witness and learn from my sister is something that I will always be grateful for. I have always looked up to my sister, and in ways also envied her successes which made me strive to do good things, better things, as well. I feel like I came into college knowing the system a lot more because I was able to witness my sister going through it. I picked a “hard” major, actuarial science, partially because of my love for math but also because of the salary I could achieve. I don’t think that I thought of salary at the time as a factor of risk and more so just an idea that was good at the time. What I will say, however, is that I think that I have gotten myself in internship opportunities early on in my college career, at least relative to my sister who got her first on after graduation, in hopes of saving money for later on. Even when I was a sophomore, I was actively looking for internships to build my resume and save some money so that I could reduce risk in the future when I hopefully move into the city with some friends. I was one of my only friends with an internship after sophomore year because I was one of the only ones that tried. I now already know where I’m going to work full time after graduation, and I would attribute that to seeing my sister go through this experience and learn that I’m going to have to be a bit more risk adverse now so that I have tolerate the risk I will endure when I more into the city in the coming years.