The recession appears to have taught young adults a powerful lesson in the importance of saving, paying off debts, and living within one's means. According to the new Chase Slate-U.S. News Consumer Monitor survey, young adults between the ages of 18 and 34 are more likely to say they want to save more, spend less, develop a budget, and pay down debts in 2011 than older generations. They're also more optimistic about their money and the economy, as well as more likely to use online tools and other resources to help them meet their goals.
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"Over my 27 years, I've watched the tech bubble burst, the stock market crash, and the housing market nearly collapse … We've seen what can happen and don't want to be caught off-guard," says Adam Williams, who blogs about finances at rabbitfunds.com. As a result of that experience, Williams said his priorities are avoiding debt as much as possible, creating a well-diversified investment portfolio, and working hard.
David Weliver, founder of the Money Under 30 blog, says the recession taught 20-somethings to create a financial safety net for themselves. "We're starting our adult lives knowing the importance of having savings to fall back on in the event of job loss, and that we cannot simply buy a home and ride its perpetually increasing value to retirement." As a result, he says, "We're more goal-oriented about our finances—because we have to be."
The Chase Slate-U.S. News Consumer Monitor also revealed a strong commitment to better money management in 2011, especially among the younger generation:
• With 98 percent of young adults saying they wanted to save more money this year, that group was twice as likely to want to save money as their parents and grandparents.
• Seven in 10 young adults reported being more optimistic than they were last year, compared with just 61 percent of the general population.
• The most popular New Year's resolutions were to save more money (81 percent), spend less (73 percent), pay down debts (60 percent), and develop a personal or family budget (59 percent). Young adults are twice as likely to make New Year's resolutions than seniors are.
• Almost 2 in 10 young adults said they wanted to get a better job or more work in 2011.
• Americans also want the country to improve its own bank account: They listed fixing the nation's finances and balancing the budget as their No. 1 goal for the country in 2011. Twenty-somethings are more likely to think the economy is improving compared to older groups (44 percent for the 18 to 34 age group versus 31 percent for those between 35 and 44).
• Online money management tools are increasingly popular, especially among young adults, who are three times more likely than other groups to use online tools to help them budget. They're also more likely to make New Year's resolutions.
In order to meet these New Year's goals, financial experts recommend the following strategies:
Decide on your goals after reflecting on the previous year. Part of moving forward requires a year-end review of your finances, says Gail Cunningham of the National Foundation for Credit Counseling. She recommends writing down everything you spend for 30 days so you notice patterns of expenditures that might be slipping through your fingers unnoticed. The Chase Slate-U.S. News Consumer Monitor found that when asked what they wished they had done differently in 2010, respondents listed saving more, better tracking their money, earning more money, and being more disciplined.
Share your plans with others. Whether you want to stop wasting money on unnecessary shopping trips or pay off your credit card debt, share those goals with friends and perhaps even strangers. Websites such as 43things.com and MyLifeList.org makes it easy to share goals with similarly-minded people.
Take small steps. "An effective life stems from making big goals and then breaking them down into doable steps. If you have big goals like buying a house, spending a year traveling, or starting a business, it's important to figure out how much money you'll need, and then make a map for getting there," says Laura Vanderkam, author of the time-management book 168 Hours.