Top 4 economic obstacles for young people – and ways to cope
The Great Recession hit many people hard, but it is slamming young people now coming into the workforce, the so-called Millennials. "The whole budget is totally stacked against [Millennials]," says Isabel Sawhill, a senior fellow at the Brookings Institution in Washington. But all is not lost for America's 18-to-29-year-olds. If they are proactive and make smart career moves, young people can avoid setbacks and long-term damage to their careers, earning power, and lifestyle. "An important message is that recovering after a bad start will take quite some time," says Till von Wachter, a Columbia University economist and author of a study on Canadian students' job prospects. "As the labor market recovers, you need to be very watchful and active and search for that better job." Here are four top obstacles facing young people and strategies to help:
1. Mounting college debt
A college education – the ticket to success for half a century – doesn't look so surefire these days. Some 46 percent of Millennials called a four-year college education an economic burden, according to the Heartland Monitor Poll this past spring. The reason? Too much debt.
In 2008, two-thirds of graduating college seniors carried serious student loan debt, $23,200 apiece on average, according to the Project on Student Loan Debt. That was twice the average level of debt for 2000-01 graduating seniors. With jobs now scarce to pay down that debt and wages stagnant for a decade, college students seem stuck. But there are ways to ease that squeeze.
To manage debt while saving for future goals, young people need to prioritize and control spending, says Earl Wong, a San Diego-based financial adviser with Wells Fargo Advisors, LLC. "When I'm talking to youth, their goals are usually short term: Get out of college debt, get a new car, live in a place without roommates," he says. "We get the primary goal down on paper and develop a plan."
Mr. Wong recommends a free budget tool at Mint.com for Millennials to track their spending.