Gen Y is Stupid, Smart, Lazy, and Diligent About Money

As I understand it, Gen Y includes those folks who were born from 1978-1994 (according to the Wikipedia entry on Gen Y) or 1979-1994 (according to a BusinessWeek article on Gen Y), or maybe just 1977-1988 (based on the back cover of The Generation Y Money Book, by Don Silver).

The definition of Gen Y is the least of its concerns. Gen Y seems to be all over the news, blogs, and other media regarding their treatment of money and career. Are they bad with money, insufficiently serious about their careers, spoiled, and unrealistic? Are they attentive to money, conscientious and community-oriented, and just unlucky to be saddled with skyrocketing costs of education and healthcare?

I’m not a member of Gen Y (under any definition, though don’t think I didn’t try to find a source that would allow me to redefine myself as a 20-something). But all the buzz about Gen Y piques my curiosity.

What is the deal with Gen Y and money?

Simple enough question, right? So I did some digging, and here are some simple enough answers.

Gen Y is terrible with money.

• “They’re called Generation Broke by the media.” (The Money Book for the Young, Fabulous, and Broke, by Suze Orman (inside cover flap).)
• “20- and 30-somethings are in a financial mess. Is it because we're dumb, arrogant or simply uneducated?” (“Why Generation Y is Broke,” at MSN Money (tagline to article).)
• Their median credit-card debt is $8,200, and they make up a disproportionate amount of U.S. bankruptcies. (“Why Generation Y is Broke,” at MSN Money.)
• They live in Peter Pan’s Never Never Land by living with their parents, relying on their parents for financial help generally, and otherwise refusing to grow up. (“Narcissists in Neverland,” at Newsweek.)
• Only 31% of those working already contribute to their 401(k) plan. (“Youth Is Wasted on the Generation Y Investor,” at NYTimes (citing Hewitt Associates study).)
• They “haven’t a clue on how to allocate their funds”—on average putting 35% of their investments into fixed-income options like bond funds and stable-value funds, meaning they are investing more conservatively than their parents. (“Youth Is Wasted on the Generation Y Investor,” at NYTimes (citing Hewitt Associates study).)

Gen Y is great with money.

• “They have financial smarts.” (“Generation Y: They’ve arrived at work with a new attitude,” at USAToday.)
• 37% (total) and 46% (of those already working) expect to start saving for retirement before age 25. (“Generation Y: They’ve arrived at work with a new attitude,” at USAToday (citing Diversified Investment Advisors survey).)
• 70% of those working already contribute to their 401(k) plan. (“Generation Y: They’ve arrived at work with a new attitude,” at USAToday (citing Diversified Investment Advisors survey).)

Gen Y doesn’t care about money.

• They would “overwhelmingly rather ‘pursue their passions’ than ‘make lots of money.’” (“Narcissists in Neverland,” at Newsweek (citing Manpower study).)
• They place a higher value on “self fulfillment.” (“Generation Y: They’ve arrived at work with a new attitude,” at USAToday.)

Gen Y cares a lot about money.

• 81% say that getting rich is their most-important or second-most-important life goal. (“Generation Y’s goal? Wealth and fame,” at USAToday (citing Pew Research Center poll of 18-25 year olds).)
• 74.5% say it is "essential" or "very important" to be "very well off financially" (“Generation Y’s goal? Wealth and fame,” at USAToday (citing Higher Education Research Institute survey of college freshmen at the University of California-Los Angeles—noting this figure is rising and was 41.9% in 1967).)
• They view education as “a passport to greater earning potential.” ("Why do most students go to college? To get a job and earn more money," at Young Money (citing University of Phoenix study).)
• They are less interested in “developing a meaningful philosophy of life” (“Generation Y’s goal? Wealth and fame,” at USAToday (citing Higher Education Research Institute surveys, showing 85.8% of respondents showing interest in that in 1967 and only 45% in 2005).)

Gen Y doesn’t want to work as much.

• They want to work less and care a lot about “work life balance.” (“Generation Y: They’ve arrived at work with a new attitude,” at USAToday.)

Gen Y is working a lot.

• They (the teenagers) are working more than their parents did (as teenagers)—averaging 17 hours a week compared to their parents’ 8-10. (“Generation Y Savings,” at CNNMoney.)
• They work through college—with 70% working while in school at an average 23 hours a week, and with 30% working more than 30 hours a week. ("Why do most students go to college? To get a job and earn more money," at Young Money (citing University of Phoenix study).)

Gen Y doesn’t like to talk about money.

• 1 in 5 would rather visit the dentist than discuss long-term financial planning. (“Generation Y Money Fears” at Young Money (citing Nationwide survey).)
• 1 in 8 would rather have a colonoscopy than discuss estate planning. (“Generation Y Money Fears” at Young Money (citing Nationwide survey).)

Gen Y is open about money.

• They’re “open” with and “happy” to discuss their finances with each other. (“Gen Y more open with money talk,” at The Daily Telegraph.)

Phew! Glad we got that all cleared up. One of my favorites was: 31% or 70% of working Gen Y is contributing to 401(k). Really gives me a lot of confidence in surveys.

Why all the contradictions—or perhaps paradoxes? To some degree, I think it really doesn’t matter. Part of me thinks the desire to categorize people into neat little boxes just relates to marketing—marketing personal-finance books and products specifically to women, marketing personal-finance books and products specifically to young people—and specifically to baby boomers, specifically to Gen X, and now specifically to Gen Y. If you’re a member of Gen Y and have your financial house in order, great. If you don’t, and it’s useful to look at personal-finance books or blogs or other products aimed at Gen Y, great. (In addition to the Silver and Orman books mentioned above, I noticed, for your possible reference: Generation Debt: Take Control of Your Money--A How-to Guide, by Carmen Wong and Generation Debt: How Our Future Was Sold Out for Student Loans, Bad Jobs, No Benefits, and Tax Cuts for Rich Geezers--And How to Fight Back, by Anya Kamanetz.)

Maybe the way in which they approach personal finance speaks to you.

Maybe it doesn't.

What do you think of Gen Y and money—whether you are Gen Y or just see them on TV? Bad rap, good rap, accurate rap,…?

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