How Twenty-Somethings Became Debt Scapegoats

Young adults are doing a lot better than you might think.

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It’s time for someone to stand up for twenty-somethings. For years, we’ve been labeled “generation debt.” This week’s New York Times Magazine asks, “What Is It About 20-Somethings?” before delving into all the reasons we have failed to “grow up.” And last month, Parade magazine lambasted us for draining our parents’ retirement accounts through our over-dependence on them.

[In Pictures: 8 Painless Ways to Save Money.]

The problem with all this angst over our generation is that much of it is simply not true. We are not drowning in debt. We have not failed to grow up. And perhaps most importantly, we are not sucking funds away from our parents, rendering them financially unstable. In fact, surveys show that the money flows both ways, especially as we get older. A 2008 Charles Schwab survey found that two in five people say they will eventually need to give their parents financial support, not vice versa.

Among the other myths:

1) We all live at home with our parents because we can’t afford our own homes.

This falsehood is perhaps the most pervasive, made famous by 2006’s Failure to Launch starring Matthew McConaughey and Sarah Jessica Parker. But according to the research group The Network on Transitions to Adulthood, while as many as half of young adults under the age of 24 live at home, 85 percent of them live on their own between ages 25 and 29, and 93 percent have left by age 30.

Even more noteworthy is the fact that these numbers, and the overall uptick in 20-somethings living at home as compared to the 1970s, predates the economic downturn. In other words, something else is going on besides financial factors. Could it be that our parents enjoy having us around, and ask us to live with them? More on that below.

2) We waste our money on iPods and Louboutins.

We actually care less about following the latest trends and styles than other generations, according to a slew of recent retail surveys. Instead, we’ve adopted a newer, more frugal mindset. A survey by TNS Retail Forward found that shoppers in their 20s and 30s are most likely to buy the least expensive versions of products. In many ways, the recession shaped our buying habits just as we were coming of age as consumers.

[Visit the US News Personal Finance site for more insight and money management tips.]

3) We have no money.

It’s true that our generation faces a high unemployment rate. By some measures, one in five 20-somethings are currently unemployed. But many of us have great jobs with impressive benefits. Studies by the Federal Reserve Bank of Minneapolis show that after you adjust for inflation and benefits, median compensation rates have increased 28 percent since 1975.

So why does mainstream media continue to berate us for being such a scourge to society? It makes an easy story – who doesn’t like to pick on the latest scapegoat? It also makes readers feel better about themselves. If middle-aged parents are having trouble saving for their own retirement, who better to blame than their children, who have undoubtedly been draining some of their hard-earned money away from them since the day they were born. In such uncertain economic times, everyone’s searching for someone to blame for their financial instability, and their fingers seem stuck pointing at us.

But the truth is, the generations aren’t in conflict. When parents and adult children do co-habitate, it’s often mutually beneficial. If one person pays the mortgage, then the other pays the bills, or cooks the food, or at least cleans the house. One family I interviewed for my book Generation Earn split duties this way: The older couple paid the mortgage and took care of household chores, while the younger couple paid all the bills. Each of them reported saving thousands of dollars a year and planned to continue splitting costs and sharing a household indefinitely.

That’s just the kind of creative teamwork that makes it possible to thrive in the current extended downturn. Articles that promote the myth that 20-somethings are living off the hard work of their parents are focusing on the wrong story.

Kimberly Palmer is the author of Generation Earn: The Young Professional’s Guide to Spending, Investing, and Giving Back, which will be published in October by Ten Speed Press.