According to a new study conducted by the American Institute of Certified Public Accountants, Generation Y (eFIPO generation, 17-35) are not saving money and are engulfed in debt. Why is this happening? Times have changed. We live in complex world that promotes the need for immediate gratification. Whether itís the media (TV & radio) or celebrities, we just canít help but want more.
Americans aged 25-34 had a median net worth of $3,746 in 2004, which is a significant decrease from $6,788 in 1985. Debt accumulation has also increased from $3,118 to $4,733. The net worth figure is also skewed because it doesnít encompass inflation. The value of $6,788 in todayís dollars would be about ~13,000 (using a 3.7% inflation rate). If I used the savings rate it would be even higher. What does that mean for you? Start saving, spend below your means, and invest in your future. You canít use the ignorance card anymore. Donít come up with more reasons why not to save for retirement. Learn from your mistakes and start being proactive.
I know this data seems very frightening, but the eFIPO Generation have a few aces up our sleeves. First, we are the most educated generation in American history. The baby boomers have to retire at some point, and who do you think will fill those spots? Illegal immigrants? Of course not! Second, time is working with us. We are young and we can correct the screw ups that weíve made over the years. Start to pay down your debt, and use the awesome powers of compound interest and market returns in your favor. Learn your investment strategy and begin building your nest egg.
We donít have to be the debt generation. We are Generation Y and we have the ability ask ďY not?Ē Y not be rich? Y not retire young? Y not get involved in politics? We have the ability to break the cycle. Itís up to you if you want to be part of the experience or sit on the sidelines.
Generation Y Not?
November 1st, 2006 at 10:08 pm