Generation Y has suffered more financially than other generations, according to the Western Union Global Payments Money Mindset Index.
The reason: Gen Y is growing up at a time when the financial crisis has impacted all aspects of their financial existence from getting a job to paying off debt.
“They are trying to learn the rules of the game, but the game is changing all around them,” says David Shapiro, senior vice president, Western Union, in an email interview. “This combination of difficult economic conditions and some of their money management behaviors has created the perfect storm.”
The Money Mindset Index shows that 17% have lost their primary jobs as compared with 15% of all consumers, 29% of Gen Y report they have trouble managing their own spending as compared to 21% of all consumers, and 21% say they have been hit with increased credit card debt as compared to 16% of all consumers.
The survey was conducted online in May of 2010 by Javelin Research from a random sample of 3,007 respondents who answered questions about their current behaviors and emotional mindset regarding debt and personal finance issues. The survey has a margin of error of 1.8 percentage points.
The index found that although Gen Y-ers plan to create a budget and look for jobs, they are more stressed about finances and have trouble managing their money. Nearly 30% of those surveyed report difficulty in managing their spending, while more than 20% wait longer to pay their bills, and 35% have borrowed money from friends or family members.
Meanwhile, half of Gen Y respondents reported feeling increased stress about financial obligations in the last six months. Twenty-seven percent of Gen Y survey participants have been turned down for a loan or line of credit, the index reports. In addition, 60% of Gen Y’ers have not seen their credit score in the past year and 44% have never seen it.
Yet baby boomers and Gen X-ers are not experiencing the same difficulties and in fact are seeing positive changes in their financial situation.
Demos, a public policy research and advocacy think tank in New York, has found that stagnant wages, job insecurity, declining employer-sponsored health insurance and retirement benefits, coupled with rising expenses, soaring debt and a low savings rate have jeopardized the economic security of Gen-Yers.
But there are a number of solutions. Banks are offering financial calculators and the ability to set up online, recurring bill payments, explained Schapiro, while other sites are offering budgeting tools that can assist even the most financially challenged.
“While some generations aren't as comfortable with these kinds of tools, Gen Y has grown up with technology,” said Schapiro. They have an inherent high comfort level with these kinds of services. By taking advantage of these tools, Gen Y has a solid foundation for getting their finances back on track. The silver lining is that, in spite of the difficult economy, Gen Y is engaging in money-savvy behaviors that can help build a better financial future.”