When Logan Robinson graduated from the University of Arizona in 2012 with a degree in chemical engineering, he found a job pretty quickly as a engineer for a major pet-food company. Yet, he still encountered a financial hiccup that he didn't anticipate — the start-up costs of living on his own, including transportation, renting an apartment, and furnishing it. "I didn't have a car and didn't have any savings," he says. "I had to get a credit card and acquire a decent amount of debt."
Maria Calendo, a 2011 University of Arizona graduate, experienced a similar financial "Ah-ha" moment when she faced the difficulty of building up a nest egg even with a full-time job at Liberty Mutual Insurance. "When I get money saved up, something always happens," she says — a medical emergency with her dog, the cost of a plane ticket for a family member's funeral, money she needs to attend various friends' weddings. "These costs come up. It's unfortunate."
Then there's Ali Freedman, who moved home to Tucson months after she graduated from college and her father passed away. "I thought it would be easy to find a job," she says, remembering living with her mother. She hoped to find a teaching position but instead ended up working part-time at Crate and Barrel and the Cheesecake Factory. Eventually, Freedman decided to take out a variety of loans to enroll in a master's teaching program at the local university. It seemed like the only way for her to pursue her chosen career path.
These are just some of the stories of recent college graduates, embedded in the latest results of a multiyear University of Arizona study that's trying to document the way young people develop financial know-how. The ultimate goal of the longitudinal research is to develop a better method to teach financial education based on the way teenagers and twentysomethings establish actual habits. "If we look at how these behaviors are formed, we have a better chance of intercepting them," Joyce Serido, one of the study's primary researchers and an assistant professor at the University of Arizona, told National Journal back in May.
The new results of the study mark the fourth time over the last six years that Serido has interviewed the same pool of young adults. This time, roughly 1,000 of them participated in the survey, which looked extensively at their transition from college to careers. Among the most surprising findings was the degree to which young adults (even those employed full-time) still rely on their families for financial assistance. Many also face mountains of student debt, averaging $22,725 in undergraduate loans. "The transition to adulthood for this age group is markedly different than it was for previous generations," Serido says. "When people are working full-time and still relying on their parents for support, that's a development that to me is bad."
A deeper dive into the study's results show:
- Fifty percent of those surveyed say they rely on financial assistance from their families to cover expenses, even though nearly half of these people are employed full-time.
- Young adults with a steady job and low levels of debt report that life satisfaction and financial well-being is much higher than participants with part-time or no work, or considerable debt. Young adults with debt (even those with full-time jobs) say that they are 17 percent less satisfied with their financial well-being than their peers with no debt; they also report that they were less satisfied with their lives broadly. The takeaway? Debt, from student loans or otherwise, weighs heavily on the psyche of today's young adults.
- Financial independence is also less important to this group as it ages. In an earlier wave of the study, 95 percent of students rated financial independence as an important goal. That figure now clocks in at 91 percent.
- Finally, none of the young adults express any rush to hit the traditional markers of adulthood like marriage, homeownership, or raising children. Twenty-eight percent of the 1,000 students surveyed say that marriage is not an important life goal for them, followed by 27 percent who say the same about having children.
Serido hopes that her long-term research will convince educators and policymakers to rethink their tired notions of teaching personal finance and to instead cast it as everyday, practical life skill — not just something that becomes necessary when a person suddenly experiences a windfall, or inherits a portfolio to manage. "It used to be that financial education or financial literacy was only something you needed when you had resources to protect," she says about the older models of financial-literacy education, many of which have failed. "The message instead has to be that financial literacy is something everyone needs. People have to be aware of the resources they have and what they'll need to support the lifestyle they want."