Still, Even After Getting That Dose Of Reality, Young People In Texas And Elsewhere Are Largely Uniformed About Personal Finance

Category: Finance, Insurance.

In some respects, every generation has its own unique challenges. One part of that reality comes for those who have finished a college education and face thousands of dollars in student loan debt.

But young people reaching adulthood in Texas, especially in larger cities like Austin, are waking up, Dallas and Houston to the financial realities that come as part of life. At the same time, today s graduates and young professionals, who entered college just after the dot- com bust, did so with a new sense of reality, having seen in the news examples of how the financial markets weren t everything the previous generation might have thought them to be. One study, a human resources, by Hewitt Associates consulting firm, found young people to have developed minimal saving habits while also making investment choices that may be far from advantageous. Still, even after getting that dose of reality, young people in Texas and elsewhere are largely uniformed about personal finance. A combination of the desire to live" the good life" and the accompanying high debt accumulated in gaining the education necessary to gain employment in their chosen field is creating significant problems for this generation. Debt, prevents young people, the experts say from working toward goals like buying homes, saving for retirement or attaining a decent standard of living.

While in college, this generation had a relatively simplified list of what constituted" necessities. " Now that they ve graduated and are out on their own, the list has expanded, with some confusing" necessity" with" wish. " Experts say the number one problem is a combination of educational and commercial debt, with some saying the average burden for a university graduate has risen by 50% over the past decade. The situation gets worse in that young people, offered a seemingly easy option by credit card companies, go even further into debt, entering a spending spiral that will ultimately choke them off from making wise financial choices. Financial experts say there is hope in embracing a strategy that focuses on high- interest debt, which ultimately will free up money to invest in building appreciating assets, like a home. For some, that can get to the point where they find themselves struggling to make the most basic of wise choices, like making sure they will remain healthy through affordable health insurance. While it may be easier said than done, the advice is sound. One strategy is to reduce expenses through creative thinking. It also comes with some practical" how to" steps on how to make it happen.

Some companies offer basic products and services geared toward those in just such a financial predicament, among them cell phone providers with pre- paid service and auto manufacturers that offer the most basic of transportation. Some experts say that individuals could cut expenses by as much as 40% without denying themselves a decent quality of life. Reducing expenses in the early years of a career might also involve taking in a roommate instead of renting an apartment alone, even going to movies on discount nights. Others say keeping records on how progress is being made is also important. Those with an eye to purchasing a home could apply the same thinking to what they can afford. The idea is to have mileposts that provide encouragement over what may be a long trip ahead. Instead of focusing on the type of home their parents might have worked years to afford, a more modest property might be more realistic.

What usually doesn t make much financial sense is to wait for housing prices to drop while paying rent. With options that include buying a duplex and renting out half of the property to offset a mortgage, the possibilities begin to widen. At the same time, the future outlook is largely a positive one for those willing to look at the economic realities and adjust their expectations while matching effort to what is needed to accomplish realistic goals. The key to success in this new reality will be making choices that give a young person the tools to make their future a better one. Those who have more recently entered the job market are well- equipped to lay the groundwork for a sound financial future, especially since it is stronger than it has been in years. While getting out of debt and striking out on their own are challenges facing young people today, the need for a sound financial future also includes taking a look at other basics, such as health insurance.