A Financial Roadmap for Generation Y

For many 20-somethings, downgrading expectations is the best survival strategy.

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In many ways, Pete Mele, a 28-year-old father of two in Queens, N.Y., represents his generation. After he graduated from college with a small amount of debt and got married, he says, he hit a brick wall. Mele and his wife would like to buy a house eventually, but even if they managed to come up with a $20,000 down payment, he says the mortgage would be at least double the rent of their three-bedroom apartment: "At this rate, we'll never have a house—it's just fiscally impossible. So I don't know what to do."

[For more, read: 10 Ways to Thrive After the Recession.]

These days, 20-somethings are not just struggling to pay off student loan debt and coping with rising health insurance costs. They're also fighting to hang on to their jobs. A recent survey by the nonprofit Qvisory found that roughly 1 in 5 young adults between the ages of 18 and 29 is unemployed, compared with a 7 percent unemployment rate for those over age 30. Twenty-somethings are also graduating from college with more debt than their predecessors did and taking jobs that don't always come with health insurance. Half of those surveyed by Qvisory said they've lost health insurance coverage during the past five years, and 2 in 5 said they have skipped meals to save money. "America's younger generation is in jeopardy of not just doing worse than their parents but of spending decades digging themselves out of debt," says Gina Glantz, treasurer at Qvisory.

If you feel like you are among those trapped in debt and struggling to get on top financially, consider these five strategies for shifting your perspective:

Adjust your expectations. Are today's 20- and 30-somethings really that much worse off than their parents and grandparents? Although the challenges facing young people are certainly real, part of the problem is their overblown expectations. In a recent story published in the online magazine Slate, Jennifer, 29, owner of a two-bedroom condo with her husband, worried that she won't be able to have children for at least a decade because she and her husband can't afford to buy a house. Yet in some countries, a two-bedroom condo is considered the height of luxury. The overall rise in homeownership rates, from 55 percent of American households in 1950 to 68 percent today, has probably contributed to the idea that owning a house is an essential part of becoming an adult (and perhaps having children).

[For more, read: "When Young People's High Hopes Create Despair."]

Don't compare yourself to your parents. Beth Kobliner, author of Get a Financial Life: Personal Finance in Your Twenties and Thirties, says she thinks this group is slowly adjusting its expectations, but today's 20-somethings grew up in a time when wealth across the board appeared to be expanding and "people had inflated expectations of what living well means," she says. It's likely that their parents' home values rose along with their investments.

Appreciate what you have. Johanna Miller, 31, of College Park, Md., recently commented on the Alpha Consumer blog that she feels lucky because a scholarship allowed her to avoid student debt and she has a relatively secure job as an editor for an academic publication. Jae Jimenez, a 20-something commenter from Brooklyn, N.Y., says he and his wife are enjoying their frugal lifestyle and that they live with their daughter in a two-bedroom apartment. "We get so tired of hearing people say they have to live in a house once they get married or have a kid. Yes, it would be nice, but it's a luxury . . . . That's ridiculous to have such crazy expectations, especially right now," he wrote.

Steer clear of debt. "I see too many young people choosing to live above their means and on credit," says Nancy Thomas McInnes, 46, a teacher in Gainesville, Fla., who is also a volunteer facilitator for a financial education class. McInnes, an older member of generation X, learned how to manage her money the hard way: Although the only debt she and her husband now carry is their mortgage, they once had roughly $18,000 in credit card debt. "We cringed every time we walked to our mailbox. The fear of what bill might be inside was always present," she says. "Now we use just debit cards and live within our means. A huge burden has been lifted from our shoulders."