Generation Y is more financially responsible than you think

College students and recent graduates fill out job applications and registration forms at the City University of New York Job Fair in New York City.

Tess Vigeland: Last week, we explored some of the reasons why Generation X is avoiding the stock market. Been through more than their share of financial crises, those 30- and 40-somethings. Well this week, we're going to explore their younger brethren, Gen-Y. You could call them the Great Recession generation.

And Kimberly Palmer wrote recently in U.S. News and World Report that they actually have a better relationship with money than the rest of us! She's a senior editor for the magazine. Welcome back to the show.

Kimberly Palmer: Thanks for having me Tess.

Vigeland: So you say in this article that young adults -- 20-somethings in particular -- are contrary to popular opinion, more responsible than we think, that they've actually learned a lot out of the economic crisis.

Palmer: They really have. There is such a myth out there that 20-somethings are drowning in debt and just really not good at making money decisions. But the reality is, we've been forced to learn so much by experiencing this recession and that even though we do have high amounts of student loan debt and credit card debt, we've also learned a lot. And we've actually realized that we have to make an effort, we can't trust experts; we have to do our own research. And surveys actually suggest that we are taking these lessons to heart and actually being smarter with our money.

Vigeland: You keep saying "we," so I must ask, how old are you?

Palmer: I am 31, so I am not a 20-something, but I am part of Gen-Y. I'm just on the cusp.

Vigeland: OK, fair enough. So what specifically is this generation doing to try to avoid perhaps some of the mistakes of previous generations?

Palmer: Number one is avoiding debt. And we almost do this to a fault. Debt has really taken on such a bad reputation as something that we want to avoid at all costs, that there's some evidence that 20-somethings are avoiding it too much, they're even afraid like purchase a house or even go back to school in some cases.

So avoiding debt is number one. And then also being more frugal in general. We really are conscious about how we're spending money, trying to budget more, using websites that help us manage our money.

Vigeland: You know, I kinda feel like we hear this about every 20-something generation that comes along. I mean, I'm a Gen-Xer and I remember hearing boomers say how we were all irresponsible with our money -- and we turned out alright. Do you think that that's just a function of older people looking at younger people and thinking that they're just all never going to learn?

Palmer: I do think there's something really tempting about saying that 20-somethings are bad with money. For some reason, it's something that older generations like to say. But I do think there's something a little bit different going on now. I think that the current generation of 20-somethings did have this unique experience that I think it is possible will continue to affect them. This experience of going through the recession really I think will have some long-lasting impact on how we think about money.

Vigeland: How are they managing their money? I mean, so many of us grew up without any sort of personal finance education and I think this generation is certainly a part of that. How have they learned about personal finance?

Palmer: There are so many different voices out there talking about personal finance -- blogs, websites. You can actually make learning about money really fun, because there are so many different ways to learn and approaches. Budgets Are Sexy is one blog that sprung up that really people are drawn to. It makes talking about money fun and I think that's how you draw 20-somethings in.

Vigeland: One of the lessons that you suggest for the rest of us -- who, perhaps, are a bit older -- is to embrace optimism. To believe that the economy is gonna get better. How do you do that when there is so much that points the opposite direction?

Palmer: It is really hard. And there is a big temptation to sort of just almost throw your hands up and feel like we've been dealt such a bad hand. There are so many challenges. But there's sort of a flip side to that and some of the challenges actually make it a little bit easier. So the fact that the real estate market, for example, is soft in a lot of areas means that some 20-somethings can afford houses before they thought they would be able to. Of course, the challenge of finding a stable job, finding health insurance, that has shaped young people a lot and given us that extra motivation to not take on too much debt and to frugal where we can. Because as we get older, we have this in our minds that things could turn around again and we could face hardship again. So I think that we wanna have that rainy day fund more maybe than our parents did at our age.

Vigeland: Kimberly Palmer is a senior editor for U.S. News and World Report and the author of the book "Generation Earn." Thanks so much.

Palmer: Thank you Tess.

Vigeland: Visit our Makin' Money blog for more on investing.

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My small family of 4 now has 7 college degrees, a doctorate is in process. Although, we come from an extremely financially modest family background, we never borrowed a cent to get us through college & university. However, we all worked (I swept classrooms, washed kitchen pans, worked as a dishwasher, fired the college boilers, worked in research lab, sold my blood, worked summers in a mental hospitar & chemical plant, saved, etc.) - to the detriment sometimes of academics - yet 2 of us were sometimes on Honor Rolls. If one is in debt or having financial shortages, everything else is frivolous. Borrowing and buying luxuries, taking vacations, trips, eating at restaurants - are all too costly to our generation. These are the differences that you are missing in the discussion about today's youth. They do not get the bit about frugality, buying less and not taking travel vacations. These are the real differences in generational attitudes.

I don't know if my generation is more financially savvy than other generations. I do think that we are taking the time to learn personal finance at an earlier age than gen x or baby boomers did. Additionally, I think our approach to personal finance is shifting more toward personal responsibility than other generations. My friends and I know that we are responsible for teaching ourselves. I have never considered my government to be a role model for my financial behavior because it functions on the macroeconomic scale, not like an individual household. Nor do I blame my parents for not teaching me more. They provided food and shelter until I was old enough to fend for myself, and I thank them for that. After all, neither the government or my parents are ultimately responsible for my future, so why waste my time saying could of, should of,or would of?

I am not so certain generation Y is that much more savvy financially than even my generation (X). My baby sister is from the Y generation and does not do well with money at all, at her age neither did I. The times may reflect it on occasion, just like I imagine during the Great Depression children learned to be frugal. But in a time where credit and debt are far more prominent, I worry for our upcoming generations. After all, they are growing up with a government that can't even show them a good example :)

Average income for a 30 year old is $27K to $36K annually They have 30% more debt than any other age group.(Consumer Credit Counseling Service). Wiser and Better money mangers?? No

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