The Iconoclast Investor

This morning I received an email from a friend with a link to an article called “Why Generation Y is Broke.” The article featured a few experts and 20-somethings describing the enormous amount of debt young adults are in right now because of education costs and access to credit cards.

Some of those interviewed blamed lack of education about financial planning, budgeting and debt. Others blamed increasing costs of education and health care, while salaries have remained fairly stagnant. And still others pointed to the explosion of consumerism in our culture. I think it’s a combination of all of the above, but whatever the cause, it’s clear a solution is needed.

As a member of Generation Y, I am fortunate to have left college with no debt and I have not accrued any credit card debt. My parents always taught my brother and I to live within our means, that saving money and investing it is the key to having what you want in the future, to always pay off your credit card bill and balance your checkbook. But I know I am rare among my friends in having these views.

While there are a few people I know who are actively paying down their debt, saving money and investing, many of them give little thought to these matters. Some of them hardly save any money, have a huge amount of debt from both college and credit card use and never balance their checkbooks. The most startling part is that many of them don’t seem to see any problem with this lifestyle.

I think part of the problem is that many in my generation have grown up with enormous opportunity and wealth, so a lot young people think the good times are just going to keep on coming. They forget that their parents had to work hard for the lifestyles they achieved. Another part of the equation is the easy access to credit and soaring education costs. It’s very difficult to come out of college debt-free and those loans can follow you for decades, making it hard to save money while paying them off.

I’ve often thought a financial planning and money management class would be a great requirement in high school and college. Instead of making a lot of mistakes along the way, it would help young adults enter college and the workforce with a better handle on the financial decisions ahead. It would be a way for young adults to better understand credit cards, mortgages, saving, investing, debt, loans, etc., before it’s too late and they are buried under a mountain of debt.

What advice would you give to Generation Y to help them get out of debt and to start saving money and investing it for the future?