If you’ve watched any television this fall, then you might be forgiven for thinking that most 20- and 30-somethings are so bad with money that they’re forced to live with their parents well into adulthood. On NBC’s Parenthood, CBS’ $#*! My Dad Says, and Fox’s Raising Hope, grown adults, sometimes with children of their own, depend on the Bank of Mom and Dad to get by.
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Other outlets have also joined in the fun of painting a sad picture of my generation. “What is it about 20-somethings?” the New York Times magazine recently asked, describing young adults who churn through jobs and romantic partners. Raising Hope’s Jimmy Chance symbolizes this sense of being lost when he scrawls “Jimmy’s Life Plan” on a poster in the pilot episode and ends up drawing a picture of himself being rescued by an eagle.
In some ways, the stereotype is accurate. The number of 20-somethings living with their parents is up 50 percent since the 1970s, according to the Network on the Transitions to Adulthood, an academic research group. Part of the reason is monetary, as debt loads have grown and the job market has tightened. The average borrower now graduates with around $23,000 of student loans. Credit card debt is about 50 percent higher than it was 20 years ago, with the average 25- to 34-year-old carrying around $4,000 of it.
But those numbers obscure the more complicated truth. Young professionals with college degrees have fared pretty well in the recession. A just-released report from the College Board shows that the unemployment rate for college graduates age 25 and older is about 4.6 percent, and their median salary is $55,700. For those with professional degrees, it’s $100,000.
Despite experiencing two recessions, young people report being pretty optimistic about their futures. The Pew Research Center found earlier this year that 9 in 10 twenty-somethings say they have enough money or that they will “eventually meet their long-term financial goals.”
And many of us, having learned a lesson from the recession, are taking matters into our own hands to make sure that happens: Research by online brokerage firm Scottrade has found that 1 in 3 people age 18 to 26 say they’ve taught themselves more about the economy since experiencing the recession and that they’re doing more research prior to investing—in both cases, higher percentages that those in older age groups who say the same thing.
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Books and blogs about frugality and living simply now rival celebrity websites in popularity among our demographic; cooking at home and riding a bike to work have become greater status symbols than wearing Jimmy Choos, driving a BMW, or living in a multi-bedroom “McMansion.” In many circles, those last three items would be sources of embarrassment, not pride. That's one reason why Jennifer Lopez' ode to Louboutins fell so flat earlier this year. The cultural moment that glorified $600 heels—famously exemplified by Carrie Bradshow—is long gone.
Findings from the Pew Economic Mobility Project underscore this shift: Americans no longer define the “American Dream” as being rich enough to become a homeowner; survey respondents said they ranked being financially secure ahead of homeownership. Security, which means everything from having enough cash in the bank to cover emergencies to generating sufficient savings for retirement, is now the Holy Grail.
While the old stereotype highlights young adults mooching off their parents, the new truth is that multiple generations are living together for mutual financial benefit. Katy and Keith Hewson, a young couple I interviewed in my book Generation Earn, decided to live with Katy’s parents in Houston after both couples realized they could save significant sums by sharing a roof. Katy’s parents, Gary and Cindy Smith, were able to save about $1,000 a month since the Hewsons paid for all utilities, groceries, and other monthly bills. Meanwhile, the Hewsons put the money that would have gone towards the mortgage into paying off their student loans and saving for a future down payment of their own.
As a result, the Smiths, recent retirees, are able to travel the world and delayed tapping into their retirement savings. “It’s been great to keep expenses low until we learn how far the money stretches in retirement,” says Cindy Smith. Her son-in-law, Keith Hewson, says he hopes more families start doing the same. “It might be more unusual for Americans to live with their family in this day and age, but in other countries, it’s totally normal,” he says.
That kind of creativity is what defines our generation—not debt. But as long as the media continues to perpetuate the myth of “generation debt,” portraying us as carefree spenders with an addiction to plastic and unhealthy dependence on our parents’ wallets, older generations will miss out on the opportunity to learn about—and join—the cultural shift our generation is spearheading.
This article is adapted with permission from Kimberly Palmer’s new book Generation Earn: The Young Professional’s Guide to Spending, Investing, and Giving Back (Ten Speed Press).