It happens eventually to every generation for one reason or another: Reality smacks you in the face. Often it comes when you get the first paycheck from your first “real” job and realize how much you lose in taxes. For Generation Y - those currently aged 22 to 33 years old - the tough economy and high unemployment have been the catalysts puncturing the youthful optimism and confidence of this young group of Americans.
Gen Y - also known as “Boomerangs” Or “Echo Boomers” because they are primarily the offspring of baby boomer parents who reproduced themselves in nearly identical numbers - are becoming more conservative.
Well, at least financially.
While every generation becomes more cautious as its members age, a survey by Fidelity Investments found a sharp increase (41%) in the number of Gen Y-ers saying they had become more “fiscally conservative” in the past year.
For instance, nearly two-thirds said they’re “trying to save more now than a year ago,” according to Fidelity spokesperson Brad Kimler. Compared to a year ago, the number saying that saving for retirement is an important goal soared from 18% to 53%. However, for the majority (73%) their primary financial focus is short-term: building up a cushion to cover daily living expenses and the mortgage “in case something goes wrong.”
The biggest hurdle Gen Y members have to overcome is - no surprise - credit card debt. More than one in three owes more than $5,000. A depressing 25% admit they “can’t imagine everbeing free of credit card debt.”
This recently-awakened sense of fiscal conservancy is also manifesting itself in Gen Y’s attitude toward their jobs. Until the current recession hit, America’s youngest workers had a reputation for job-hopping. In previous surveys they responded they only planned to remain with their current employer a short period of time until something better came along. Job loyalty was not a strong point.
But seeing friends face the emotional and financial hardships of layoffs has had a sobering effect. Last year nearly 40% said they had changed jobs in the past two years. This year, the number was cut nearly in half. What’s more, Kimler says the survey found a “dramatic uptick in the number saying they play to stay with their employer until they retire.” (24%)
Perhaps the fact that “money/financial issues/debt” are the main concern of this generation (more than 70%), is not surprising in light of the fact that they are moving into the time of life when people begin to marry, buy homes, and start having children. However, the economic downturn seems to have accelerated this growing sense of responsibility and the concurrent need for a stable income. By a long shot, employer-provided health insurance is the benefit they value most (82%). This is followed by paid vacation (68%), and a retirement savings plan (57%).
One interesting twist: although Gen Y’ers have typically been close to their parents, sharing similar values and interests, they said their #1 source for financial advice is their employer.
Just don’t tell mom and dad.