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Young People Are In Financial Trouble

Thanks to Emily from Taking Change for the guest post at Free Money Finance highlighting an important survey showing that young people are in financial dire straights. The report, released by the financial advocacy group Qvisory, indicates that adults ages 18-34 are facing stagnating incomes, higher expenses, and increasing debt loads. Not surprisingly, we’re also worrying about our finances more than ever.

The results of this report, Young People: Living on the Edge, does not surprise me one bit. After all, I have a college education, a steady job, and a second income, and it will still be along time before I am out of debt, able to buy real estate, ready to get married, willing to go back to school, or do any number of things that my parents—when they were my age—had done five years ago.

These struggles are congruent with a 2007 NPR story explaining how today’s thirtysomethings are earning less (in inflation-adjusted dollars) than their fathers did. And the problems seem to be getting worse. According to Emily’s story:

In last year’s survey, 44% of young adults said finances were their greatest concern. In this year’s survey, 55% of young people said finances and the current economic conditions were their greatest worries — “they do not believe they have enough money to keep pace with the cost of living,” the report says.

The report also found that more than a third (37%) of respondents indicated they were carrying more debt than a year ago. Other findings included:

  • 65% of respondents know somebody who is in a financial crisis or unable to pay bills
  • 19% have had their phone, cable, or utilities cut off because they could not pay the bill
  • 66% of respondents have credit cards
  • More than 50% have credit card debt
  • 57% of respondents only make minimum credit card payments
  • 36% have paid a late fee on a credit card
  • 62% of respondents with credit card debt have three or more kinds of debt
  • Excluding student loans, 44% of young people are more than $5,000 in debt
  • 22% are more than $10,000 in debt

Yikes!

About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.

Comments

  1. Yikes, indeed — those credit debt statistics are frightening, and are not easy to take care of once you fall down that path. I think the worst part is how many young people learn personal finance “on the fly” — its hard enough for those that do know what they’re doing, but for the vast majority of people…. Yikes.

  2. It doesn’t help that there is no formalized education on finances whatsoever before or even in college. I’m pretty sure that if someone had explained to me the magnitude of the loans I was taking out for school that I would have done something different. Either work more hours part time or probably choose a different school completely. When choosing colleges most career conselers will just say “Choose the school you want to go to. Cost shouldn’t be a factor.” I lived by that and now I left school with over 100k in loans. Luckily I landed a good enough job to afford the payments and add some extra. But I will still be paying about 1/3rd of my salary until I am 40 (and that is with early payoff!).

    Shouldn’t there be any required finance conseling when I am signing student loan documents for $20k a year at the age of 17?

  3. A sidenote to add:
    When going off to college I could sign for $20k/year private student loan (along with federal loans) yet, which would take 30 years of standard payments to pay off.

    Yet by law I couldn’t:
    1. As a cashier, sell alcohol to people of age.
    2. Drive after 9pm.
    3. Drink alcohol responsibly.

    If you aren’t trusted by law to do the above simple things, then how to they trust that you know the magnitude of what you are signing with student loans? I can’t be trusted to understand how to responsibly drink a beer but I can be trusted with $20,000.

  4. I was caught in the same trap as Angie. “Don’t worry about the loan amounts! You’ll make plenty after college to more than pay for it.” Lies! 60K in debt later, I can make all my payments – barely, and with a lot of overtime at work.

  5. Mark Twain said history doesn’t repeat itself…but it rhymes. Is the young generation of the mid-2000s in any better shape than the younger generation in the mid-1930s when the US was in the depths of 25 percent unemployment? That generation grew up to be frugal and set the stage for the rise of the Baby Boomers. Perhaps this generation will do the same.

  6. This report doesn’t surprise me either. Credit card debt is going to hit 1 trillion sooner than later. I’m thinking about going cash only. Anyone else?

  7. Well college debt i can see being a problem of not telling people what they are getting into. But Credit Card debt is not excusable. If you do not have the money do not buy it, that is that oldest rule in the book. Any child who had an allowance understands that principle. Charging and charging on the credit card knowing you do not have the funds is just being stupid wanting the world with no salary to do it.