Why It’s Difficult for Young Adults to Save Money

Saving Money is Hard
provided by danielmoyle


Saving money always seems easier to do on paper than it is in real life. Even though I am primarily a saver, I know all to well the challenges that people face when it comes to saving money. Young individuals or families face even more challenges. While young adults may have some expenses that older individuals do, that doesn’t mean that saving money is easy. Below are some of the challenges that young adults face when trying to save money.



Why It’s Hard For Young Adults to Save Money

Low Salary: Students graduating from college are entering the job market with little to no work experience. Combine this with a struggling economy, young adults are often forced to settle for any regular job. Many of my college friends have been forced to continue working at a restaurant or accept an americorps position because of the inability to find something better. Having a low salary makes it difficult to save money no matter who frugal you are.

Paying Off Student Loans: While I was able to graduate from college without student loans, most young adults are buried in college debt. Most of these loans come due six months after graduation. Even with making the minimum payments, the commitment to repay these loans takes away from what little income people in their 20’s do have. This moves saving money to the back burner. They often fail to see the power that a debt snowball can have to empower them to save.

“Need” for Technology: If the first two challenges weren’t enough, most young people have lives that are connected to technology. Interacting on social networks is part of young adults’ culture. Facebook was created with my generation. The ability to stay connected doesn’t come without a price. The monthly fees that young adults pay for internet on their smart phones combined with the hefty price tags of the latest technology (computers, smart phones, tablets, i-pods, etc.) in and of themselves makes saving money difficult. The price of technology gives a new meaning to the latte factor.

Lack of Experience: Starting to manage your own finances is a difficult thing. Learning to reduce your expenses and increase income doesn’t come easily. Most often, it takes time to adjust. It can even take a few big mistakes to shake people in their 20’s into reality. Many young adults don’t realize the work it takes to stay out of the red each month. It could be that they are used to living on their parents’ income or just a matter of inexperience. Regardless, it takes a little time to adjust.

23 Responses to Why It’s Difficult for Young Adults to Save Money

  1. I think that the main reason most young adults have a hard time saving is because once they graduate and land a decent job, they think they have made it. They get a bigger apartment, a new car, new clothes, and go out all of the time. They have no concept of how much things cost and that they don’t need the latest and greatest of everything.

    It’s not completely their fault either. No one teaches them about personal finance in school. They have to hope that their parents were good with money and learn from them.

    My advice for young adults: Try your hardest to avoid buying a lot of new things once you get a job. Keep living life like you are in college. It may not seem fun or cool now, but it will be really fun in the future when you have the money to do things you want.

  2. Great question! Why is it difficulty for anyone to save? The obvious answer is with a lower salary you have less to work with. Recent legislation that has allowed companies to have automatic enrollment in 401k plans has dramatically increased plan participation in young workers. It all comes down to personal choice in the end,

  3. Lack of Experience? GUILTY! I had plenty of people around me whom I could ask (while in my 20’s) for financial advice/suggestions, but I decided I was invincible & could do it better on my own. Boy…was I wrong! The only thing I proved was I had a talent for screwing up!

    Doing what I can now to avoid finding myself in a “time loop of financial misery” (aka- repeating my mistakes).

  4. I agree with your list. I would also add peer pressure. When you are younger you feel the need to keep up with your friends or others in a different financial situation. You don’t have the self confidence yet to tell yourself you are doing great without those things. When you get older, you don’t care about what others have. You enjoy what you have.

  5. The post did not differentiate between single adults and married adults. I notice w/ single folks that they tend to spend a ton on eating out because it’s a social thing. So that would for sure be on the list if it were specifically dealing w/ single adults.

    And I am not sure if I have the answer for that yet. I think it differs per individual.

  6. Often it is difficult to tell the difference between a reason and an excuse. For instance, I earn the same amount of money as the majority of my work peers because we’re all on the same stipend. Over years in the situation I have observed many people living lifestyles that prevented them from saving or even caused them to borrow money to get through school. To them, they have “reasons” why they are not saving money. To me, they are excuses. It’s the same with me relative to others – I have “reasons” why my savings rate isn’t higher (we “need” that fast internet connection at home!) that sound like “excuses” to others who have made different choices.

    No answers here other than closely observing others’ lifestyles, like through PF blogs, can be helpful in evaluating our own choices to see if they fall under reasons or excuses.

    • Thanks emily. It’s true… we do seem to make excuses. I hope that through readings PF blogs, people will become more aware of how they are spending their money. That is one of the main reasons I am in this business, after all.

  7. I feel like the main reason is that many young people go directly from having their parents pay for everything when they’re in college to suddenly paying for everything themselves. They don’t realize that the standard of living they are accustomed to isn’t reasonable for their income. I feel like I’ve managed to avoid this largely because while my parents did pay for my living expenses during undergrad, I got a lump sum at the beginning of every semester and had to pay for all of my rent, utilities, groceries, gas, school supplies, etc. out of that money. I already knew what my expenses were when I transitioned to supporting myself during grad school, and when I graduate in May I’ll just need to add in health insurance and my cell phone bill. When you transition gradually like that it forces you to scale back your expenses and lifestyle as you take on more personal responsibility, so it’s easier to view the increased income from full time work as money that can be saved rather than money that needs to be spent.

    • You hit the nail on the head – many young adults think that they should immediately be able to sustain a standard of living that it took their parents 30 years to build up to. Depending on income, that may or may not be the case (not, for me!).

  8. I agree with Penny. Having young adults pay for things they need with their own money during their undergraduate years can help then “transition” better into supporting themselves better financially after graduating from college.

  9. I think the last two on your list are the most prevalent to me. College grads are just poor at managing money. It’s nearly a fact. Going hand in hand with that, there’s lots of temptation for technology and other purchases that aren’t really needed (cars?)

    I think the unfortunate fact is that a lot of young people spend money because their friends also do, and they just end up feeding off one another.

  10. It’ll keep getting more and more difficult for younger generations because they are bombarded with new advertising and trends. It was tough for me when I first started out too. The money in the bank was burning a hole in my pocket and it was easy to go out every weekend and have fun. 🙂

  11. It’s a lot more fun going out and hanging with friends. The difference is now your doing it with a salary and the dollar beer nights are too easy to pass up. Bottom line they are all just excuses to not start. Some good excuses, but excuses none the less.

    • Yes, it’s hard without anyone to look up to. I think the blogging world is going to change that slowly.

  12. Its quiet difficult for adult to save money cause of technology.Every year new products were issued and the young minds are still craving to have that items.