Key Findings: College Students
' The rising costs of higher education, coupled with
decreases in many families liquid savings, have led to
increasing dependence on educational loans and other forms
of borrowing. This contributes to a cognitive disconnect
for students between the reality of their current incomes
and what constitutes an affordable lifestyle.
' Students are not embracing the traditional or "old
school" financial values of their parents and grandparents
that place emphasis on saving, living on a budget, and
self-denial. Instead, intense competitive consumption
pressures on college campuses, which are exacerbated by
increasingly easy access to consumer credit, has
substantially increased the social acceptance of
increasing levels of personal debt. Many students view use
of consumer credit as a reward for their hard work at
' The lack of widespread or formal training/education
about personal finance in high schools and colleges
contributes to a sense of complacency among students, who
are not aware of the long-term consequences of their
reliance on credit, including its effect on their credit
scores. Even so, their desire for more formal personal
finance education is explicit, especially among those
whose learning curve has matured. Key Findings - Young
' Young Singles find themselves entering the job market
with increased levels of existing debt (both student loans
and consumer credit) than previous generations. Their
resistance to adhering to a budget based on current income
contributes to the continued waning influence of
traditional or "Puritan ethos" financial values.
' Relatively high starting and early-career salaries among
young adults (who have not experienced major
macro-economic fluctuations) have created a heightened
sense of optimism about future earnings potential.
However, this generational confidence can manifest in
status anxiety as expressed through competitive
consumption to demonstrate success.
' Soaring home prices have shifted Young Singles focus
from saving for a rainy day to the allocation of more of
their income to the purchase of a home. Housing
appreciation has created a perception of a financial
.security blanket, and many participants confided they
were less motivated to begin long-term financial planning
due to the housing-driven wealth effect. A common
expectation among this group is that they will cash in on
their home equity for unforeseen financial demands such as
job loss or medical expenses.
Key Findings - Young Families
' The Young Family life stage illustrates the ongoing
generational shift in personal attitudes towards debt from
frugality and thrift to self indulgence and instant
gratification. Use of consumer credit to fuel spending
beyond a person's means to pay in cash is often justified
as a well-earned entitlement for hard work and a stressful
' Much like Young Singles, Young Families also feel
pressure to "keep up with the Joneses", particularly as it
relates to the rising costs of raising children. The
definition of needs vs. wants and desires is changing, and
use of consumer credit, with its longer pay off cycles,
helps Young Families to purchase product upgrades that
satisfy wants and desires.
' While Young Families acknowledge the impact that (a)
planning/saving for emergencies and (b) reducing debt
loads will make to their long-term financial prosperity,
they are failing to implement necessary budgeting and
spending guidelines. This has contributed to greater
dependence on consumer credit and debt rather than a
rejection of competitive consumption pressures.
Key Findings - Mature Families
' While the parents in the Mature Family life stage apply
traditional values of thrift and frugality in satisfying
their own needs, they are willing to abandon these
principles when it comes to providing their teenagers with
what they consider a socially-expected level of material
abundance. The pressure to satisfy the increasingly-costly
wants and desires of their teenage children underscores a
significant generational conflict and has contributed,
along with other factors such as rising levels of home
equity, to reduced household savings.
' The resistance to fiscal discipline as it relates to
their children's consumption behavior illuminates how
middle-income families are unwittingly fostering an
inter-generational cycle of consumer debt dependence. It
perpetuates a financial strain for parents into their
retirement years, as well as unhealthy debt management
Practices and behaviors for the next generation, placing a
financial burden on children who must now finance more of
their own educations and incur larger amounts of debt
during and after graduation.
' The competing realities of under-funded retirement
programs and the increasing costs of college for their
children are a source of tension for Mature Families. The
resolution of these competing demands will profoundly
influence the timing and quality of life in their future
Key Findings - Empty Nesters
' While the Puritan ethos reigns supreme among this group,
it has been largely resisted by their children. This has
long-term consequences for Empty Nesters, since they are
in their final chapter of preparing for retirement, and
yet many of their children are reluctant to terminate
' Empty Nesters are concerned about social pressures on
their children to exceed the standard of living of past
generations. These intensifying consumption pressures,
together with the desire of Empty Nesters to provide their
children with more material wealth than they themselves
enjoyed as children, have led to the erosion of the very
cultural values that they cherish and that have
contributed to their current economic comfort.
' Empty Nesters candidly admit that they have not
succeeded in their efforts to transmit their traditional
values of thrift and self-discipline to their children and
grandchildren. Unlike other cohorts, Empty Nesters are
self-critical and assign blame to themselves as parents
for their lack of fiscal .tough love..
Key Findings - Seniors
' The attitudes and behaviors of Seniors toward saving and
consuming are profoundly shaped by their own personal
experiences with economic scarcity and macro-economic
fluctuations during the Great Depression and World War II.
For Seniors, prudent use of credit is emblematic of an
honorable personal character. Even though debt levels
among Seniors have risen, this group makes a clear
association between indebtedness and irresponsibility.
' Seniors remember the community banking environment of
their younger years, which delegated considerable
authority to community bankers in terms of deciding which
applicants were worthy of a loan. Seniors are critical of
the democratization of credit, which has made more credit
more easily available to more people.
' This skepticism makes them distrustful of the modern
financial services system, with ramifications that extend
to other areas of financial planning. For example, despite
amassing large amounts of home equity, seniors are
reluctant to refinance their mortgages even if a lower
interest rate could save them money.
About the ICFE:
The Institute of Consumer Financial Education (ICFE) was founded in 1982 by the late Loren Dunton (creator of the Certified Financial Planner (CFP) designation). The ICFE is dedicated to helping consumers of all ages to improve their spending, increase savings and use credit more wisely.
The ICFE is an award winning, nonprofit, consumer education organization that has helped millions of people through its education programs and Resources. It publishes the Do-It-Yourself Credit File correction Guide, which is updated annually. The ICFE has distributed over one million Credit/Debit Card Warning Labels and Credit/Debit Card Sleeves world wide.
The ICFE became an official partner with the Department of Defense/Financial Readiness Campaign in June of 2004.The ICFE was an active partner in the California Student Debt Resource Awareness Project (CASDRAP) which resulted in a new web site: (studentdebthelp.org). CASDRAP disbanded in 2010, shortly after the web site project was completed. In 2011 the ICFE assumed the single sponsorship of the (studentdebthelp.org) web site and is now responsible for its content and operation.
The ICFE is also an on-line help for consumers who spend too much. ICFE's spending help was featured in PARADE Magazine in the Intelligence Report section. The money helps and tips are from the ICFE's Money Instruction Book, our course in personal finance.
Visit the ICFE's other web sites at: www.financial-education-icfe.org and studentdebthelp.org. Both sites helps consumers and students with mending spending, learning about the proper use of credit, budget and expense guidelines, how to set up and implement a spending-plan and also how to access financial education courses and how to teach children about money. Other ICFE services include: Ask Mr. G, a free eNews, and an online resource center for students, parents and educators, plus financial education learning tools and a book store.