A Life Stage Analysis of Changing Attitudes and Behaviors
 revealed in a new Dr. Robert Manning report: Living With Debt Part II
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A Life Stage Analysis of Changing Attitudes and Behaviors
 revealed in a new Dr. Robert Manning report: Living With Debt Part II

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 school.

' 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 Singles

' 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 lifestyle.

' 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 retirement.

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 financially-dependent relationships.

' 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.

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