Young adults suffering through the Great Recession are having serious problems getting a handle on their spending, credit and debt woes, according to a new survey out from Western Union.
The survey, officially called the Western Union Global Payments Money Mindset Index, offers a great peek into the challenges currently facing the 18-to-34-year-old crowd, commonly known as the Millennial Generation, or Gen Y.
Among the study’s findings:
- Half of all Gen Yer’s surveyed report feeling increased stress about their financial obligations in the last six months, and more than 33% say their economic situation has worsened during that time.
- 35% have borrowed money from family members or friends.
- Nearly 30% say it’s hard for them to manage their spending.
- 27% of Gen Yer’s have been turned down for a loan or line of credit.
- 60% haven’t seen their credit scores in the past year, and 44% have never seen their scores.
The American dream gone awry
It’s little wonder, perhaps, that so many from the Millennial set are finding it more difficult than others – like the baby boomers surveyed – to cope with these tough economic times. After all, so many young people have put their heart and soul into achieving the American dream, only to find that a lot of their expectations simply aren’t being – and perhaps can’t be – met.
For example, even though we all encourage young people to go to college and get a degree, mainly for the chance to increase their work prospects in life, we often forget that many people can’t afford the skyrocketing cost of higher education. The result is that well-intentioned students and their families wind up with enormous amounts of debt – both student loan debt and credit card debt.
To add insult to injury, the weak job market means fewer career options, even for those Gen Yer’s who are qualified and honestly trying to land meaningful work.
Perhaps that’s why so many 20- and 30-somethings have become “Boomerang Kids” – moving back in with their parents because they can’t afford to live on their own. Not with debt up to their eyeballs, not to mention rent, utilities and so on.
Those who manage to stay afloat economically, and live mostly independently, sometimes nevertheless reach back to the bank of Mom and Dad for financial support. Enter a company like Western Union, which many a parent or relative (myself included) have used to send loved ones money in their time of need.
Steps in the Right Direction
So in light of this survey, what can be done?
For starters, we all need to do a better job of financially educating young adults and equipping them with the tools they’ll need to survive the fiscal realities of this ever-changing economy. Hopefully, the new Financial Literacy Office to be created within the federal Consumer Financial Protection Bureau will help. Both were mandated under the recently signed financial reform bill.
Additionally, policy makers need to address the fact that Gen Y is dealing with a set of unique burdens that previous generations never faced. For instance, the average college graduate from the class of 2010 came out of school with more than $20,000 in student loan debt, according to the College Board.
Many people who attend professional schools – like law school or med school – often wind up with $100,000 or more in student loans to repay. We’re basically talking about college loans becoming a mortgage on the backs of these young adults, something unprecedented in the history of America.
Lastly, when appropriate, I think parents, relatives and close friends should be willing to lend a helping hand financially to those individuals they know have proven themselves to be responsible, hard-working young adults but who simply need a bit more time to get their financial act together.
Coming to the aid of the Millennial generation (temporarily) isn’t encouraging laziness or setting up dependency for life. In this case, it really is about extending a hand up – not a hand out.