Wallet Watch

The headline above was effectively the title of this piece I saw on MSN Money today. Can I choose none of the above?

Its author was doing her best expose of why Gen Y is having trouble paying its bills. Unfortunately, her article paints Gen Y as a bunch of clueless young people who couldn’t budget their way out of a paper bag.

Truth is, Gen Y is smart and responsible. We aren’t powerless. The answer to the question “Why Generation Y is broke” has less to do with our brains and will than it does with the unique economic challenges we face. The interviewee in the MSN Money article doesn’t typify the generation. Check out this description:

When [Sophia] Wallace graduated with a student-loan debt of $60,000, she found herself overwhelmed to the point of financial paralysis. She tore through a $5,000 loan from her dad as bills stacked up. She had no idea where her money was going — despite making what she defines as a good salary. The sense of powerlessness crippled her.

When friends recommended she hire an accountant, Wallace packed a FedEx box with bills, receipts and mail and sent it off.

“He wrote me a letter that said, ‘You’ve got to get your life together! Most of these bills aren’t even open.’ It was a really humbling thing,” Wallace says. “But the next time, all my receipts were on a spreadsheet. No one had ever taught me to make a budget or balance a checkbook.”

I’m willing to bet that the majority of Gen Y isn’t as “powerless” as this poor sap who was had been waiting for 28 years to for someone to help her balance her checkbook. The reason Gen Y is broke is because the economy is throwing Gen Y unique challenges that other generations has never experienced.

Check the statistics: Gen Y is being squeezed through a vise that the Baby Boomers and Gen X never experienced. 25-to-34 year-olds averaged $4,088 in credit card debt in 2001, 55 percent higher than it was for the late baby boomers in 1989. The costs of a college education has increased nearly 1.5 times in this decade alone, nevermind the costs of getting through college. And something like 25 percent of a Gen Y’s income right out of college goes to servicing their debt, both credit card debt and student loan debt.

Granted, Gen Y ran up some of their credit card debt funding their road trips and booze, but most ran it up because the things we need — education, health care, gasoline, housing — costs so much more than it did for the baby boomers.

To add to this, the average job tenure is decreasing. Whereas the typical baby boomer spent her entire career at one or two firms, the typical Gen Y’er will change jobs 4 times by the time she’s thirty, and may end up changing careers multiple times during her working life. In addition to learning new skills to adapt to this uncertainty, the typical Gen Y has to manage how to carry her health care and retirement accounts from job to job during that time.

This task of managing one’s career and the attendant health care, retirement, and student loan debt issues is a challenge that no other generation has had to deal with before.

True, some of Gen Y are irresponsible and will throw all their unopened bills into a shoebox, never to look at them. But I disagree strongly that Gen Y has to choose between being dumb, arrogant, or uneducated. The game has changed so drastically and we’re figuring out the new rules as we go.

[whew that was a rant!]