Generation Y is less financially prepared than previous generations
Each generation has certain financial characteristics that are indicative of the time they were brought up in. For example, Americans that were raised during the Great Depression era were taught to be thrifty, skeptical of credit and strict savers. As a result, many individuals of this generation tend to be wealthier and have adequate retirement savings, health insurance and investments.
However, Generation Y grew up in mostly affluent circumstances when credit card spending was popular and the economy was thriving. The effects of the Great Recession have crippled the financial circumstances of many young adults, many of whom are having difficulty finding employment and facing significant student loan and credit card debt. Fox Business says those ingrained financial habits of young adults, such as borrowing on credit cards and contributing the bare minimum to savings, may further hinder younger generations making it even more of a challenge for them to become financially solvent.
"The habits of Gen X and Y are very different than how their parents spent money," Ameriprise Financial senior vice president Pat O'Connell told Fox Business. "Wind the clock back and think about what's happened since March 2000. This has left a mark on younger generations and how they manage their money."
There are several ways young adults can change damaging financial behaviors and get on the path to smart money management. First and foremost, experts encourage young adults to take a hard look at where they currently stand financially versus where they want to be. Examining their present circumstances, including debt, savings, retirement accounts, emergency funds and insurance, can help individuals create a budget that will allow them to reach their goals. In addition, reviewing their finances closely can alert individuals to spending patterns that may be inhibiting their progress.
Adults should also look at all of their payment options to determine if there are ways to save money or cut their balances. For example, there are several student loan plans that young adults can choose from that may help them either save more each month or pay down their balances more quickly. In addition, some insurance providers, lenders and student loan issuers provide discounts and incentives to consumers who allow their payments to be automatically deducted. Contacting all service providers to seek out more affordable packages can help adults put more income toward debt and savings.
Lastly, speaking with a professional, such as a credit counselor, can educate young adults on money management habits that will allow them to build a solid financial profile.