Going Broke

Is Generation Y going broke?

And yet stats indicate our generation's financial literacy is abysmal, with personal finances to match. Only 52% of high school seniors passed a recent national financial literacy test, meaning adults entering the work force do not know enough about basic budgeting, interest rates or taxes to make sound decisions for their own lives. Quiz: Will you end up in your parents' basement?

As a group, we have failed to get a grip on fiscal reality:

• The median credit-card debt of low- and middle-income people aged 18 to 34 is $8,200.
• The average college debt for recent grads is more than $20,000 and rising.
• People between the ages of 25 and 34 make up 22.7% of all U.S. bankruptcies (but just 14% of the population at large), according to a recent report.

While I was growing up, I did not get a whole lot of financial training, and what I did get was from my parents. Where I really learned about money was working a part time job at the local super market. There's nothing like having to earn that spending money to teach you to respect it.

"We're in a generation that was kind of shielded from a lot of financial responsibilities," says Wong. "Twenty years ago, when you were in college you didn't have a credit card, and (now) all of a sudden we had to take on debt to go to college. Then we get out of college and we have to have that handbag and an iPod," she says. "It is so easy to take on debt."

Now this is something I simply do not understand. "And we have to have that handbag?" No, you don't. You don't have to take on debt to buy that hand bag or iPod. Life is not going to end because you don't have a new iPod Touch. Does no one in this generation have the fortitude to withstand the consumerism and live within their means? It's quite simple - each month you spend less than you make. The excess goes into savings. Of couse, you have to have an idea of what you make and what you spend, which seems to be the problem.

"This generation feels that somehow or another they're going to figure out some technological advancement that's going to get them out of their financial troubles and outsmart the market," says Manning, who served as adviser to the forthcoming documentary "In Debt We Trust." The documentary paints a picture of national financial crisis stemming from the personal-debt burden.

This is something else I don't understand. Apparently personal accountability is out the door along with control. Depending on technology to save you from financial troubles? What, they'll find a better way to counterfeit money? The financial crisis I can certainly believe. When the country with the world's largest GDP is actually spending more than it makes you've got problems.

The fix? "There is hope for straightening (young people) out if they get an education," Siebert says.

Across the country, states are starting to mandate financial education in public schools, and Congress has passed a number of bills to encourage financial literacy.

Evidently the solution is more regulation, another issue I have problems understanding.  School is a good start, but practice is a better teacher.  I think the part time job taught me more than a class room ever could, and is a good plan for any kid's education.

via the Instapundit

Posted by: jcallery at 07:46 PM | No Comments | Add Comment
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