It’s hard to believe that school starts up again in a matter of weeks. While I can’t overemphasize the importance of education, I believe today’s young adults face quite a juggling act in the years ahead.
Statistics demonstrate just how important education is to one’s lifetime
earnings. On the other hand, graduating from college with large student
loans can be devastating to one’s finances.
The juggling act of getting an education and minimizing debt is a major
challenge. Nonetheless, I was astonished at the Washington Center for
Equitable Growth’s report that there are 5.8 million young people that
are either not enrolled in school or not working. I don’t know how they
will ever become financially self sustaining.
For those aged 16 to 24, the unemployment rate is roughly double the
national average. Narrowing the category to ages 16 to 19, unemployment
is approaching 25 percent.
One ticket out of unemployment is education. According to the Bureau of
Labor Statistics, if you have less than a high school education,
unemployment is nearly 20 percent.
With a high school diploma the rate falls to fifteen percent. With some
college, it goes down to roughly 12 percent, and with a Bachelors degree
or higher, it drops dramatically to just over 5 percent.
Clearly, education reduces the likelihood of unemployment, but college
debt still remains an obstacle. Without education there’s little work,
but without work, how can you pay for an education? It’s indeed a major
As a financial adviser, I believe it’s extremely important that people
understand the mathematics of life. A borrower should understand how
much it really costs to pay back a debt. A saver and investor should
take the time to understand how much they need to save and invest to
reach their financial goals.
Likewise, young adults need to understand that, if they want to get
ahead in this competitive world, that they truly need to educate
themselves. They need to learn to manage both money and debt, and
develop a strong work ethic.
Over the years, I’ve found statistics can be misleading. People,
especially politicians, tend to twist numbers to fit their agendas. I
recently came across a statistic regarding young people living in their
parents’ homes that I consider misleading.
The official census states that half of those under 25 live with their
parents. That sounds like doom and gloom for young people.
But then the Census Bureau states, “It is important to note that the
Census Population Survey counts students living in dormitories as living
in their parents’ home.”
I think this is extremely important because the number of young adults
in college has actually been increasing at a steady rate since the
1980s. In other words, what statistics show on the surface appears to be
doom and gloom, but in reality, is good news.
Many young adults are not rotting away in their parents’ basement, but
rather are crammed into dorm rooms trying to improve their lot in life.
True, they might be in the dorms on mom and dad’s money, but they’re not
in basements, as the statistics would lead you to believe.
The bottom line is to get a good, practical education and try to
minimize debt. And enjoy your college years; the real world comes soon