These numbers are shocking. Average college students graduate with $20,000 of debt. The average middle-to low-income American, aged 18-34, owes $8,000.
What’s the problem with Generation Y? Is it possible that today’s young working adults are too smart to earn college degrees but not enough to balance their checkbooks?
It is not that smarts are necessary for financial management. Instead, it is inexperience that is putting Generation Y’ers in deep waters.
While the chicks may be gone, the baby boomers still leave nest eggs for their children. A Pew survey revealed that 68% of boomer parent financially support their children. Many working adults put off important financial tasks such as paying taxes and investing in stock markets to their parents. Generation Y may be able to make a lot of money, but it lacks fiscal responsibility.
But parents are not the only ones who can tell the full story. Over the past 20 year, the economy has undergone dramatic changes. Students today use credit cards to get funds and the opportunity to accumulate debt that was not possible for them in the past.
Although starting salaries have not increased in significant numbers, expenses have. “Twenty- and 30-somethings cannot afford to pay off college educations or cars in cash, so they take out substantial loans,”Eric Solis, President and CEO of Save252.com. “Once they graduate, they must learn to balance loan repayment with high gas, rent and food prices.”
Many Generation Y’ers don’t plan for retirement. Many working adults feel that they are unable to manage their finances or plan for the future. This is where education really pays off.
Saving a little more now is better than saving a lot later. Financial services can teach young adults how to save money.
Save252, a company that specializes in saving money, is an example.www.save252.comUsers can deposit as little as $1.252 per day into a regular account or retirement account. Save252 transfers a set amount of money from a checking to a RothIRA, savings or retirement account. Generation Y’ers are able to save substantial amounts of money without the need to monitor their accounts. Working adults can save money to pay down debt and plan for retirement once they have built up enough funds.
“Generation Y grew up using technology,”Solis. “Therefore, many young adults might feel more comfortable using automated, software-based money-management systems than a calculator and pen.”
