Research conducted by Ohio State University economics professor Lucia Dunn and Sarah Jiany from Capital One Financial found that adults in their late 20s and early 30s have more credit card debt than their parents and grandparents did when they were the same age. On average, young credit card holders have $5,689 more debt than their mom and dad, and $8,156 more than grandma and grandpa.
Using readily available data from 1997 to 2009, the researchers were also able to deduce that these young people are taking longer to pay back this debt, running the risk that they will head into old age with these lingering balances.
“If what we found continues to hold true, we may have more elderly people with substantial financial problems in the future,” Dunn tells Reuters. “Credit is more readily available now, and there have been changes in interest rates and less stigma attached to having credit card debt, which may all make younger people today more willing to go into debt,” she continued.
We reported late last year on the fears expressed by some that they’ll never be able to retire because of their freewheeling spending ways as young people. Once again, this brings home the important point that you must live within your means. Quick everyday tips for doing just that:
–Use cash. When the cash is gone, the spending is over. And watching your money pass out of your hand makes you want to hold on to it a little more tightly.
–Budget for savings. A budget should include ways in which you are putting money to the side continuously. That includes money for retirement (a 401K or Roth IRA, for example) and money that you can spend in the event of an emergency. If you’re thinking about making a big purchase, you might consider another account (or even a coffee can) in which you put cash to the side for that special expenditure.
–Remember that small purchases add up. Chances are, you aren’t going to fancy restaurants on the regular. Or buying expensive clothes every time you go to the mall. But all those smaller purchases are hitting your wallet as well. If you’re hitting happy hour three times a week, that could be upwards of $100 right there. Twice monthly trips to H&M or Target? We all know how much stuff we think we “need” when we go into those shops. Think twice. Say no. Say it out loud even… who cares of other shoppers think you’re crazy? Reflect upon all the other, much better stuff you could be buying.