A financial storm may be brewing for the debt-laden, stressed young Americans who are part of the Generation Y demographic, according to a recent Western Union survey.
Financial positions in the first half of 2010 deteriorated for one out of three of 87 million Americans age 18-34, the index shows. Nearly 30% of Gen Y’ers reported having difficulty in managing their spending, more than 20% waited longer to pay their bills, 35% borrowed money from friends or family members, and 50% reported feeling increased stress about financial obligations.
“Gen Y’ers are generally described as creative, independent, and tech savvy, while at the same time they are sometimes seen as overly confident and impatient. Many are also in trouble financially,” says a Western Union news release for the latest Money Mindset Index.
Western Union has a good understanding of financial trouble. Now over 150 years old, the company went bankrupt in 1994 and survived by undergoing a corporate facelift that incorporates modern electronic tools such as global account transfers and prepaid credit cards. The company’s consumer-to-consumer segment, representing 84% of overall revenue, offers money transfer services that are popular with immigrants as well as college students and their parents. As a result, Western Union has become something of an expert in the spending patterns of America’s youth.
The survey was conducted for Western Union in May 2010 by Javelin Research, which surveyed more than 3,000 consumers online about their current behaviors and emotional mindset regarding debt and personal finance issues.
One bright spot for Gen Y’ers is their use of technology to better manage their finances.
“The silver lining is that, in spite of the difficult economy, Gen Y is engaging in money-savvy behaviors that can help build a better financial future,” said David Shapiro, Western Union senior vice president, in a statement. “The Money Mindset Index identified Gen Y’s use of tools such as online bill pay to manage their budget and credit standing. Factor in their high comfort level with web-based programs and budgeting tools, and Gen Y has a solid foundation for getting their finances back on track.”
The survey also found that 27% of Gen Y survey participants have been turned down for a loan or line of credit. Sixty percent have not seen their credit score in the past year, and 44% have never seen their credit score.
Older Americans are experiencing less financial trouble, according to the survey.
“Gen Y’s difficulties are in contrast to other survey respondents, many of whom are seeing positive changes in their financial situation, including less impact from economic challenges such as changes in credit card limits and increased interest rates, a declining need for spending cutbacks, and decreased shopping at discount retailers,” according to the Western Union news release.
Western Union, Vigo, and Orlandi Valuta services are offered through a combined network of more than 420,000 agent locations in 200 countries and territories. In 2009, the company completed 196 million consumer-to-consumer transactions worldwide, moving $71 billion of principal between consumers and 415 million business payments.
Read a story about Gen Y and retirement planning from the archives of InvestmentAdvisor.com.