by Alison Storm | 04/28/10
They're teens and twenty-somethings. They're confident, opinionated and prone to big spending. Fifty million people make up Generation Y. And these young people are facing a sluggish economy, fewer jobs, limited benefits and increased expenses for basics like groceries and gas. A recent study says Generation Y could be the first in 100 years to end up worse off financially than their parents. "The recession has hit them hard," Jose Garcia, associate director of policy and research at Demos, told USA Today. "It affects their income potential, their saving potential and their career-ladder potential."
Twenty-one-year-old Kristen Ammerman fits into the stereotype perfectly. She's a senior at Michigan State University, holding massive debt, working hard, and collecting food stamps. "I'm still short on rent every month. ... My friends all want the newest and best things. They spend money on them any chance they get," Ammerman told USA Today. Here are some facts about Generation Y, also known as Millennials:
- About one in three are underemployed or have been out of work at some point during the recession, according to the Pew Research Center.
- They're the least likely to have health insurance with 61 percent covered.
- Only a little over half pay their bills on time according to the National Foundation for Credit Counseling.
- Sixty percent of 20 to 29 year olds cashed out their 401k plans when they changed or lost jobs, according to a study by Hewitt Associates.
- According to MetLife, almost half are accumulating too much credit card debt.
- Fidelity Investments says they carry more than three credit cards on average and one in five have more than $10,000 in credit card debt.
- They're graduating with an average of $23,200 in student debt which is a 24 percent increase from five years ago.
Despite all of these statistics pointing to the poor money management skills of Generation Y, there are five simple things they can do to improve their personal finance standing.
- Using a Budget: Members of Generation Y should focus on creating a budget so they know exactly where their money is going.
- Living Within Their Means: Relying on credit cards less will help them keep their debt in check.
- Saving More: Adding regularly to savings should be added into their monthly budget so that it is automatic.
- Paying Bills on Time: This should be a consistent goal for Generation Y. Paying bills on time will help keep their credit scores up and help them to manage their debt and expenses.
- Managing Their Credit Score: Many members of Generation Y may not even know what their credit score is like. Checking their credit report annually will help them know where they stand and set goals for improving it.
Experts say a great quality of Generation Y is often their optimism. "They are throwing caution to the wind and have a pretty optimistic outlook," says Gail Cunningham, vice president of NFCC in a USA Today report. But hopefully they will use that optimism to build a solid foundation for the future.