The harsh reality of the recession is fading.
People are forgetting the lessons I had hoped that they would learn. They’re turning back to credit and boosting their spending. And young adults, many of whom can’t find good jobs and are struggling with student loan debt, are doing their part to be conspicuous consumers by making luxury purchases a priority, reports Julie Halpert of The Fiscal Times.
Generation Y, also known as the millennials, those born between 1980 and 2000, are good spenders, according to a report by American Express Business Insights. Young consumers increased their spending on premium luxury fashion by 33 percent in 2011 over the previous year, outpacing every other demographic
“While many millennials are struggling, there are a significant number of affluent young professionals willing to splurge on discretionary items without thinking about the long-term consequences,” Halpert quotes Jason Dorsey, a millennials expert and chief strategy officer for the Center for Generational Kinetics.
Reporting on the same American Express survey, Larissa Faw, a contributor to Forbes, writes: “Whereas older adults prioritized family-focused expenditures while in their 20s, such as buying a house, automobile, and building a savings portfolio, today’s millennials spend their money on themselves, primarily on technology and travel.”
And how are these young adults affording their luxury lifestyle?
Many are following the lead of their parents – spending more than they make – and then relying on mom and pop to help bail them out.
In looking at just mothers, one Internet site found that 59 percent of moms pay for their millennial child’s cellphone, and 53 percent of mothers spend more than $5,000 per each adult child per year to cover their everyday expenses, Faw reported.
Unfortunately, bad financial management isn’t skipping a generation. We’re raising another credit-card, spend-above-your-means generation.
Too Broke to File for Bankruptcy
Hopefully, millennials living above their means won’t end up having to file bankruptcy -- because many people can’t even afford the cost to file.
As Blake Ellis of CNNMoney.com reports, the average cost to file for Chapter 7 bankruptcy protection, the most common form of consumer bankruptcy, is more than $1,500, according to recent research from the National Bureau of Economic Research.
“For lots of people, bankruptcy has been taken off the table as an option because of the severe fees involved,” said Jialan Wang, co-author of the report. “That means many of the Americans who have seen their debt snowball out of control due to events like job loss, foreclosure or a medical emergency during the economic downturn are now left without their last financial lifeline.”
Good Money Moms
There are many parents – moms and dads -- teaching their children good money habits. Dave Carpenter, personal finance writer for the Associated Press, recently spoke with some mothers who work as certified financial planners, and they shared some of their best money advice.
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