Overcoming 20-Something Angst

Judging from the press releases that clog my e-mail, there seems to be an upsurge in financial angst among twenty-somethings -- or at least an upsurge in media coverage of perceived angst. Plagued by a tight job market, high housing prices, credit-card debt and student loans, young people will have a tough time getting ahead -- or so the story goes.

As one who often writes about and for young adults, and as the parent of two children in their twenties, I can't help taking a more optimistic view. It's always been tough for fledgling adults to become financially independent. But today's young people have more opportunities (and information) than ever before -- plus, in many cases, the luxury of trying out several directions before choosing a career path. I have no doubt that my kids' standard of living will eventually exceed my own.

Tight labor market? Hardly. An unemployment rate that's falling toward 4% -- the level historically regarded as full employment -- can only help young job seekers. This year's college grads will probably enjoy the best entry-level job market since the dot-com collapse in 2001, predicts the outplacement firm Challenger, Gray Christmas. And demand for new hires is pushing up wages as well.

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High housing prices? They haven't stopped a growing number of young adults from buying homes. The number of first-time buyers younger than 25 jumped from about 11% earlier in the decade to 14% last year.

Credit-card debt? Readers of this column know how strongly I feel that kids should avoid credit cards until they've had experience managing cash -- preferably until they're out of college. If young people wait until they're mature enough to pay off their balances, I'm confident they'll be able to use credit as a useful tool rather than a crutch.

Student-loan debt? Yes, it's been increasing. But so far the returns on higher education, in terms of average annual earnings, make the investment worthwhile. And there are ways to hold down costs.

There's no need, as one high school student recently wrote to me, to "be forced to pay more than $45,000 per year to attend the illustrious institution of your choice" when you can get a first-rate education for a fraction of the price at dozens of state colleges (see Kiplinger's ranking of the 100 Best Values in Public Colleges.) Look for more on controlling college costs in future columns.