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Generation Y Not?

November 2nd, 2006 at 06:08 am


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 it’s the media (TV & radio) or celebrities, we just can’t 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 doesn’t encompass inflation. The value of $6,788 in today’s 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 can’t use the ignorance card anymore. Don’t 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 we’ve 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 don’t have to be the debt generation. We are Generation Y and we have the ability ask “Y not?” Y not be rich? Y not retire young? Y not get involved in politics? We have the ability to break the cycle. It’s up to you if you want to be part of the experience or sit on the sidelines.

16 Responses to “Generation Y Not?”

  1. Ali Says:

    Very inspiring article

  2. Jersey Jen Says:

    Good point that many 20- and 30-something are hugely in debt. Some attribute it to poor financial education (well, more like lack of it in college), aggressive credit card company tactics (free t-shirt!), or just plain greed.

    It is true that throughout college, hardly any course teaches about personal finances. I took senior project courses in college, they teach you how to set up corporate balance sheet. But they didn't tell you how to deal with post-graduation bills and personal budgeting. I don't blame school for lack of PF classes, this info is readily available (can you say Personal Finance for Dummies?)

    Compare to 20 years ago, credit is a lot more accessible to an average person. Nowadays, more people use credit card for purchase than checks or cash. Buying with credit card is great, not only you earn reward points, you also get to consolidate your purchases. However, this also means there're people (especially poor college students) will treat credit as an "asset", while it is a "liability" in reality. Credit card companies should probably tone down their recruitment effort on campus.

    Many of us 20-something want to enjoy the middle-class wealth of our parents, not when we reach 40 or 50, but NOW! With little entry-level salary and piles of expenses and student loans, it is probably impossible to have that kind of lifestyle. Because our wants and desires that we forget our own financial responsibilities. When I graduated college, I had $6,000 in CC debt. Well, it was needed for books, rent, food, etc, during zero-income college years. But once I graduated, I paid it back in 6 months!

    Same with you, I'm all about delayed gratification, Jeremy! When you don't work hard on personal finance in your 20s, it shows in your 30s!

  3. tinapbeana Says:

    i think the credit availability is a huge difference now as opposed to 10 years ago. i've asked around and a lot of folks who are only about 15 years older than me say getting a credit card is a cake walk compared to what it was before. offers on campus, offers in the mail, offers on TV and magazines. as a college kid working 20 hours a week at $5.75 an hour in atlanta, i took whatever i could get to buy food.

    something else that i think separates this generation from any before it is the concept of retirement. for the first time, i think almost an entire generation is disillusioned about the concept of retirement, and i think most folks my age are dubious as to whether they actually will retire b/c they've all heard the projections about social security going down the toilet. IMO, those projections should make you *more* likely to save for your own retirement, but maybe that's just me.

  4. Broken Arrow Says:

    "Y not?" Hehhehehe.

  5. JRBeaudry Says:

    Yeah I dont know if coined that word, but I think its still pretty cool!

  6. Taylor Says:

    Here's another Y not? Y not get out of bed and stop being so lazy. I still cant stand all of the lazy "hippies" that do nothing and just freeload their whole lives.

  7. LuckyRobin Says:

    Okay, the last of Generation X was born in 1979, (its 1965 to 1979) so I don't get how Generation Y is supposed to go up to age 35! It should only go up to age 26 at the moment.

    I think X'ers like me and the Y's will be just fine. We are firmly rooted in the reality that we have to take care of ourselves because no government will.

    I'm more worried about the baby boomers that have no clue, no clue at all of what is coming. Neither one of my elder sister's who are in that gen and are eleven and six years older than me respectively, have retirement plans and they think they'll be getting enough social security to live on. It's like talking to a wall.

  8. JRBeaudry Says:

    Well I wish that the stats weren’t true but they are. They are also predicting that in 30 more years the deficit will be so high that the tax revenue will only pay for the interest on that debt. Unless we either reform taxes or increase them, Gen Y will be in a lot of trouble.

  9. beezer Says:

    What factors are in the net worth calculation?? I find it hard to believe that the median is that low.

  10. JRBeaudry Says:

    Unfortunately I didn’t do the study. But when you look at the savings rate of the American population it keeps on decreasing. We are in the negative numbers, which as you know is a horrible thing. “There is an increased willingness among Americans in this age group to acquire unsecured debt.” Most peoples assets in the age group specified are in depreciating items also. Cars, TV, stereo, ect.. All we realistically have to do is replace our depreciating items with appreciating ones such as real estate, stocks, bonds, CD’s, and so on..

  11. Jeremy Says:

    Good topic. I just referenced this post over on my site since there is some overlap between generation x and y and many of the financial issues for many people in this demographic are very similar.

  12. JRBeaudry Says:

    Thanks for the reference. When I look at the financial data I still think Generation X will be better off than Y. Gen X will still have full SS benefits, old Pension Plans, and only current tax liabilities. Gen Y has a lot of pressure on our shoulders and hopefully (I know we will) we succeed.

  13. tinapbeana Says:

    last time i read up on this, genX was born 1976 which puts them right at 30. weird, b/c i also read genY was 1980, which makes me a woman without a generational home!

  14. JRBeaudry Says:

    Generation X is actually people born following the peak of the post-Second World War baby boom. *1961–1981*

    Generation Y is 1977–2003. So X & Y (not the Coldplay album) do cross paths.

  15. tinapbeana Says:

    k, so i am an XY. which is pretty funny, since i'm a girl, which means i'm actually an XX. no wonder i've been feeling so conflicted! *grin*

    actually, this means i am 2 years from being the same generation as my mom. now that's just weird!

  16. drew1980 Says:

    That article (Gen Y: Get Started Saving) mentions average student loans of $20,000. I know that if I didn't have student loan payments, my net worth could be much higher!

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