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Why Young Americans Are Becoming Smarter About Debt

Benny Emerling

Millennials and Generation Z, once considered the “younger” generations, are beginning to impact the American economy more and more as time goes on.

Millennials are between the ages of 23 and 39, and those individuals on the older end of Gen Z are entering and graduating college. As this shift occurs and the workplace becomes younger, members of these generations are finding themselves needing, and oftentimes struggling, to organize their finances.

My Generation

The concern has grown so bad that 40% of Millennials expect a worse quality of life than their parents.

Baby Boomers and those in Gen-X have been growing increasingly worried that, given the current financial struggles that have been plaguing younger generations over the past few years, America’s financial future could be at risk.

One of the biggest concerns is that poor financial management and excessive debt may become a big issue impacting the lives of Millennials and Zoomers. 

However, in spite of these concerns, there are many signs pointing to the contrary. Due to a variety of factors, young Americans may be better equipped to handle and avoid debt than their parents’ generation. Let’s take a look at some reasons why.

Financial Information At Their Fingertips

With digital technology taking over the market, there’s never been a better time to learn about personal financial management. Young Americans have it better than their parents when it comes to access to information.

Gone are the days of going to the library and doing research on financial subjects. Now, anyone can simply Google what financial topics they want to learn about. On top of that, because they grew up with the technology, these younger generations are proficient in finding resources quickly.

Online, many financial gurus tend to warn against getting into excessive amounts of debt, especially when it comes to credit card debt and other short-term loans. These are considered riskier debts due to their higher interest rates, and they can often pile high become overwhelming very quickly.

Along with access to information, the internet provides a haven for many financial institutions. For those looking to improve their monetary situation, this means a lot of quick, easy access to services and products that can help them get rid of and avoid debt.


One example of this is that there are many debt-relief companies operating online now, allowing young people to have access to things like debt consolidation loans and refinancing. 

For those looking to learn more about their credit score, most credit reporting services now have websites where you can look into your information instantly. As required by law, these services will provide you with one free credit score check every year, allowing you to be able to constantly keep updated on your current score. Find that your credit score isn’t up to par? The web has you covered for that as well, as you can also find a second chance banking service online now. Relatively new to the banking space, these services offer bank accounts to people with low credit scores, allowing individuals to get back on their feet while they build their credit.

Distrust In Financial Institutions

The impact that the 2008 housing crisis and subsequent recession had on the economy was staggering. But it also had a smaller scale, personal effect on younger generations. Those in the Millennial generation lived through it, and many were directly impacted by it.

Meanwhile, those in the Gen-Z group lived in its shadow, constantly hearing stories about the crash. The impact it had on the economy was detrimental: many lost their homes, their jobs, and their retirement savings. 

But what’s most interesting about the impact it had on younger generations is that it changed their views on debt forever.

An important thing to remember is that the entire crash was caused by excessive amounts of mortgage debt. So many people lost their homes because of how over-leveraged they were before this difficult time, with multiple mortgages that would eventually fall through and become unpayable as the market collapsed. On top of that, because many investments were in mortgage-backed securities, as soon as people couldn’t pay their debts, many others lost their entire investment portfolio.

The overall impact here is significant.

Young generations lived through a time where debt destroyed a nation’s economy and many people’s lives. Because of this trust in financial institutions, particularly in the loan and credit sector, dropped significantly. This could very well mean that in the coming years, the generations that lived through the collapse will be far less inclined to take on more debt they can handle, less something like the 2008 recession happen to them.

Stress From Past Debts

It’s no secret that younger generations are currently bogged down by excessive amounts of debt, a good portion of which comes from student loan debt. This problem is starting to become significant, as 13% of adults surveyed said they would be willing to give up their right to vote in order to be free of their debts. However, this also presents an interesting possibility; those in the younger generation that have finally paid off their debts could be far less likely to get back into debt. 

While traditionally, debt has always been a hurdle for many people, those in younger generations are more bogged down by student loan debts, which can often be tens of thousands of dollars. Student loan debts don’t go away until you pay them, and because many students leave college and struggle to find a job, paying these debts off is even harder.

Those who do pay off debt are, therefore, more likely to be very hesitant to get back into debt after living with and struggling through it excessively for so long. 

Millennials and those who are a part of Gen Z have been placed in a unique position. While many find themselves struggling to become financially independent, there are many signs pointing to the fact that hope is not lost.

Slowly but surely many are learning from past experiences when it comes to debt and finances. With infinite access to information on the web, financial resources, and services, there is not a doubt that later generations are better equipped than ever to tackle their debt and move forward to a future of financial freedom.


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