Adults in their mid-20s and early 30s are at an advantage when it comes to saving for their financial goals and retirement because they have a greater deal of time than their older counterparts. But current economic conditions, unprecedented student loan balances and rising credit card debt has put young adults at a disadvantage when it comes to freeing themselves from debt and building a healthy financial foundation. But there is plenty of time for young adults to turn their finances around and start working toward a stronger position if they seek help and put in the work.
A recent survey conducted by PNC Financial Services reveals 60 percent of young adults who grew up in a period of economic growth and graduated college during the recession are experiencing stress over their finances. The results show that student loans were the most common type of balances held by adults between 20 and 29. However, credit card debt was the second highest type of balance, ranging from 20 to 48 percent for adults in the 20 – 29 age group. Auto loans came in third, which fluctuated between 9 and 38 percent, while mortgages came in last and ranged between 3 and 29 percent for these age brackets.
“Twenty-somethings are challenged with a balancing act between saving for the future and paying down their debt,” said Shannon Johnson, PNC director of consumer checking and rewards. “Though budgeting can seem overwhelming, Millennials have the luxury of time to develop a strategy and more resources than any other generation to better manage their money and achieve their financial goals.”
The problem many young adults run into when they’re facing debt and trying to save money is failing to establish a budget, or budgeting incorrectly. Credit counseling at this point in life can be particularly beneficial to individuals who are just starting out. Working with a counselor can teach young adults how to develop a feasible budget that takes their debt, living expenses and savings into account. In addition, individuals who have never create a money management plan may not be aware of the resources available to them to that they can help them save money or control their balances. Even learning small tactics, such as how to shop for a credit card or why to pay down cards with the highest interest rate first can save adults money over time.