Are Teenagers Ready to Be Frugal?
There was a great article I read in the New York Times The Frugal Teenager, Ready or Not that talks about the affect the credit crisis is having on younger people.
Many of them grew up during a time period where there was abundance, especially during the 1990’s. They do not know what it’s like to embrace a world where it is harder to get by.
In the article, it states that American high school graduates are weak in quantitative skills, making them weak with the subject of money. A 2007 study done for Charles Schwab, 62 percent of teenagers felt they were ready to handle the world of finances after high school. When asked about their knowledge of certain money topics, most had no clue about some of the basics like check book balancing (although isn’t that outdated with internet banking?).
I hope in the near future that parents will have talks with their children about money and get them to increase their financial awareness . The sooner they learn about the world of money, the sooner they can focus on building assets, and not acquiring liabilities or unneeded expenses.
Student Loans - The Silent Killer
If there is one thing that will kill your dreams of having even the same lifestyle that your parents had, it’s student loans.
If you look at the big picture, it shouldn’t be so bad…except for the fact that many young people are having trouble finding jobs or earning enough to live on their own and pay down their debt.
This problem is becoming increasingly wide spread, and I know it affects many of Gen Y. As the economy continues to decline, it is becoming harder for many to find jobs that pay enough to support often excessive levels of debt. Many students have debt that is well above the "averages" we hear about…one girl I’ve seen has a debt of $160,000! Think about what that has to be for a monthly payment, including compound interest…ouch!
We Have Options
The thing to realize is that we have options when it comes to dealing with your student loan debt.
We can move back in with our parents, room with our friends to cut down on rent, and/or start a part-time business. I believe starting a business is one way to get yourself out from underneath the rug of debt.
This article I read on CNN money - Student loans - a life sentence - talks about the issue and has a few interviews with recent college grads.
How can you avoid this problem?
First, you need to figure out where you want to go in life before you spend any more money. Do you need a degree? It would seem that every job requires it, but there are some that don’t. Explore your options.
Solutions:
1. Work a part-time job
- Try to work in an area that will help you grow toward learning something you can take with you for the rest of your life to get closer to your professional or personal goals.
2. Start a part-time business
- Look around and find out what is needed in your community and go provide it.
3. Invest in real estate
- Begin to build up cash flow that can support your student loan payments monthly so that you don’t stress about them.
I would begin by seeking help from an accountant, sharing with them your financial goals, and having them help you map out a plan based on where you want to be. Begin with the end in mind, and work your way back to today.
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