Generation Y: Huge Debt, No Savings

Jim Liebelt | Senior Writer, Editor and Researcher for the HomeWord Center for Youth and Family at Azusa Pacific University | Tuesday, April 27, 2010

Generation Y: Huge Debt, No Savings

They're called "Generation Y" — teens and twentysomethings known stereotypically for their coddled upbringing, confidence, opinionated dialogue, free-spending habits and openness to change.

Ultimately, however, the more than 50 million members may be best remembered for whether they can overcome the dire financial straits that plague many of them.

Even before the recession, those in Generation Y — the latest products of a get-it-now, pay-for-it-later mind-set that has permeated the nation's economy — faced a range of financial pitfalls as they embraced expensive high-tech gadgets and added credit card debt onto student loans.

Now, stagnant wages, job insecurity, the decline in employer-sponsored health insurance and retirement benefits, the rapid increase in basic expenses, soaring debt and minimal savings have jeopardized the economic security of the entire generation, according to a recent report by Demos, a public policy research and advocacy think tank.

Their generation is the first in a century that is unlikely to end up better off financially than their parents, the Demos report said.

"The recession has hit them hard," says Jose Garcia, associate director of policy and research at Demos, based in New York. "It affects their income potential, their saving potential and their career-ladder potential."

Kristen Ammerman, 21, a senior at Michigan State University, faces such challenges and sees her Gen Y classmates struggling with financial issues — while seemingly oblivious to the potential consequences.

"I work at a part-time job, have incredible debt and get food stamps," she says. "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."

No standard definition for Generation Y exists, but analysts generally classify anyone born from the 1980s to 2000 as members. Demographers also call them the Millennial Generation.

Source: USA Today