Traditionally, the hope is that each generation will do better than their parents before them. Unfortunately, for young people today, it may be difficult to achieve a standard of living that is as good as the one enjoyed by our parents. There are many reasons why it is more challenging to be young today than it was just a few decades ago, and many reasons why so many young people today find themselves back at home with their parents after graduating from college or living with their parents for so much longer than in the past.
Financial Obstacles of Today
Some of the key financial obstacles that are causing problems for young people today include the following:
- Student loans. In our parent’s generation, colleges were not nearly as expensive and it was possible to get a good education at a state college and to graduate with no debt or almost no debt. Today, the average student graduates with tens of thousands in loans- and that is just from going to college. Those who attend law school or medical school may have $100,000 of loans or more! Starting life with this loan burden is a huge disadvantage.
- Health care. Insurance today is prohibitively expensive and fewer employers are offering it. Those without employer-sponsored insurance or those with no jobs (and thus no insurance) may find themselves paying hundreds of dollars a month for a basic insurance policy for a single person, while young families have it even worse. Not having insurance, though, is a recipe for disaster because a single accident or illness can bankrupt you. While ObamaCare seems to present hope for change, many experts suggest that ObamaCare may make the cost of insurance even more expensive than it is now- and you’ll pay a penalty if you opt not to have it.
- Later marriages. While this can have some financial advantages (delaying children and the expenses that go along with them), it also has disadvantages as well. Two people who pool their incomes can live almost as inexpensively as one person, meaning that there is more money left over for other goals such as saving for a house or saving for the future.
- A problematic housing market. Although mortgage rates are at record lows, the housing market is and has been in a mess for a long time. People who bought houses during the height of the mortgage mess may be facing foreclosure or may be underwater on their mortgage. Those who want to buy a house today to take advantage of the low mortgage rates may not have the down payment to do it (because of student loans and later marriages) and/or may not qualify in a tighter credit market.
- More debt targeted at the young. Today, credit card companies push college students to get credit cards and to run up debt. As a result, students graduate not just with student loan debt but also with credit card debt. This is a burden that can make it even harder to get ahead.
- High unemployment rates. With a tough job market, many young people are having a hard time finding jobs in their field. This leaves people with the tough choice between taking some job just to have a job, or waiting it out living at home and trying to find work within their field.
These are some of the biggest issues that face the young today. These problems, coupled with the uncertain future of social security and the fact that so few employers offer pensions (or the guarantee of long-term employment over the course of a career) have created a situation where the financial future of the young is very uncertain.