The spend now generation

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.

Here are two important tips from the moms:

-- Know the difference between a want and a need. (I learned this lesson from my grandmother, Big Mama. It’s one of the best pieces of advice she passed on to me.) Rita Cheng, a financial adviser and mother of three from Potomac, Md., says it can be hard to tell the difference, but that it’s often clear, such as when a young child says she “needs” a cellphone.

-- Stop the urge to buy. Impulse buying is a big trap for children and adults alike, writes Carpenter. One way to stop unnecessary spending is to sleep on it. “It’s amazing how much the impulse to spend goes away if you give it time,” said Eleanor Blayney, president of Directions for Women financial advisory service in McLean, Va.

The Color of Money Question of the Week: “What’s the best money tip you got from your mom or pop? Send your response to colorofmoney@washpost.com. Be sure to include your full name, city and state. Be sure to put “Good Money Moms” in the subject line.

You’re On Your Own, Kid

For last week’s Color of Money question, I asked: “Should parents pay for college if they have the money?”

A Reuters story reported that some parents who are able to pay for their child’s college education have chosen not to because they don’t think their kid will appreciate the help and learn to be independent.

“I feel parents do themselves and their children a huge disservice by paying for entire college expenses,” wrote Pat Host of Washington. “These kids don’t appreciate what their parents are doing for them, so they really don’t care if they graduate. I can’t count on two hands how many people I know who didn’t finish college, wasting tens of thousands of their parents’ money. I had to take out loans to pay for tuition, so I was going to graduate no matter what. While you don’t want to encourage your kids to incur life-crushing debt, a small amount gives them skin in the game and an investment in their own education.”

D. Mayo of Waldorf, Md., thinks parents who can pay but won’t are being selfish. “Pay for your child to go to college if you can,” Mayo wrote. “I have promised my daughter that she will not graduate with debt. I can’t let her start out her life in the real world like that. I’d rather die owing the money.”

Mark Cleland of Clinton Township, Mich., sided with Mayo.

“I think it’s selfish and irresponsible for parents not to help pay for their kid’s college or trade school, etc., assuming they have the wherewithal. In this day and age a high school education gets you nowhere; it’s just the foundation for their next schooling.”

“If parents can afford college, they should make a plan with their child,” said Paula Kocher of Malver, Pa. “We said we would cover four years - no more - and all spending money is to be earned by the child. Our daughter worked all four years and the last two she had a job with free housing and a stipend. If parents cannot pay, it must be discussed well in advance so the child can plan summer jobs and choose a school that will not result in terrible debt. Having the means and turning your back on your kids is just not right.”

Tia Lewis contributed to this report.

You are welcome to e-mail comments and questions to colorofmoney@washpost.com. Please include your name and hometown; your comments may be used in a future column or newsletter unless otherwise requested.

Michelle Singletary writes the nationally syndicated personal finance column, “The Color of Money.”
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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.

Here are two important tips from the moms:

-- Know the difference between a want and a need. (I learned this lesson from my grandmother, Big Mama. It’s one of the best pieces of advice she passed on to me.) Rita Cheng, a financial adviser and mother of three from Potomac, Md., says it can be hard to tell the difference, but that it’s often clear, such as when a young child says she “needs” a cellphone.

-- Stop the urge to buy. Impulse buying is a big trap for children and adults alike, writes Carpenter. One way to stop unnecessary spending is to sleep on it. “It’s amazing how much the impulse to spend goes away if you give it time,” said Eleanor Blayney, president of Directions for Women financial advisory service in McLean, Va.

The Color of Money Question of the Week: “What’s the best money tip you got from your mom or pop? Send your response to colorofmoney@washpost.com. Be sure to include your full name, city and state. Be sure to put “Good Money Moms” in the subject line.

You’re On Your Own, Kid

For last week’s Color of Money question, I asked: “Should parents pay for college if they have the money?”

A Reuters story reported that some parents who are able to pay for their child’s college education have chosen not to because they don’t think their kid will appreciate the help and learn to be independent.

“I feel parents do themselves and their children a huge disservice by paying for entire college expenses,” wrote Pat Host of Washington. “These kids don’t appreciate what their parents are doing for them, so they really don’t care if they graduate. I can’t count on two hands how many people I know who didn’t finish college, wasting tens of thousands of their parents’ money. I had to take out loans to pay for tuition, so I was going to graduate no matter what. While you don’t want to encourage your kids to incur life-crushing debt, a small amount gives them skin in the game and an investment in their own education.”

D. Mayo of Waldorf, Md., thinks parents who can pay but won’t are being selfish. “Pay for your child to go to college if you can,” Mayo wrote. “I have promised my daughter that she will not graduate with debt. I can’t let her start out her life in the real world like that. I’d rather die owing the money.”

Mark Cleland of Clinton Township, Mich., sided with Mayo.

“I think it’s selfish and irresponsible for parents not to help pay for their kid’s college or trade school, etc., assuming they have the wherewithal. In this day and age a high school education gets you nowhere; it’s just the foundation for their next schooling.”

“If parents can afford college, they should make a plan with their child,” said Paula Kocher of Malver, Pa. “We said we would cover four years - no more - and all spending money is to be earned by the child. Our daughter worked all four years and the last two she had a job with free housing and a stipend. If parents cannot pay, it must be discussed well in advance so the child can plan summer jobs and choose a school that will not result in terrible debt. Having the means and turning your back on your kids is just not right.”

Tia Lewis contributed to this report.

You are welcome to e-mail comments and questions to colorofmoney@washpost.com. Please include your name and hometown; your comments may be used in a future column or newsletter unless otherwise requested.

Michelle Singletary writes the nationally syndicated personal finance column, “The Color of Money.”
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