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Troubled Youth

Youth definitely has its advantages -- firm skin, high metabolism, and aptitude for figuring out how to work the latest technological gadgetry. When it comes to finances, though, younger adults report feeling a heavier burden than older people.

Take a recent Scottrade retirement survey. It found that more than half of the adults in the enviable still-under-age-35 demographic said they were extremely or very concerned about managing day-to-day expenses, planning for a major emergency, and having too much debt.

These younger adults also know they'll need lots and lots of money for retirement. Many reported that they wanted to have $2 million or more accumulated for that goal, but they're off to a slow start.

Why do these younger adults worry so much? It may be that they're facing a lot of financial demands at one time.

Some start their adult lives with a financial burden, carrying student loan or credit card debt left over from college (not to mention the possibility of debt caused from earning a graduate degree). At the same time, they're trying to establish themselves or start a family, which involves purchasing a house, having children, starting an emergency fund, building retirement savings, putting away a little for their kids' college tuition, while still hoping to have enough money left over to enjoy their fleeting youth.

They're doing all this while also trying to get their careers up and running, so their income may not yet be what they want. They also probably don't expect to rely on the full safety net their parents may have in the form of pensions, generous work benefits, or Social Security.

No wonder they're worried! If this scenario sounds familiar, don't lose sight of the advantages of youth. You've got lots of time to achieve your goals. Start by arranging your priorities:

  • Put debt reduction at the top of your list, especially if you have credit card debt or other high-interest consumer debt. That debt can hang around until you're old and decrepit if you don't attack it with some vigor. Every extra dollar you pay to your credit card is money that could be going toward one of your many other goals. Once you wipe it out, everything else will get easier. You can get lots of help in our Get Out of Debt corner.
  • Even if you have a lot of high interest debt to wipe out, start building up an emergency fund. If you can commit just a few extra dollars a month, a safe stash of cash will allow you to absorb many of life's unexpected bumps and twists. It will also help you achieve your debt reduction goals by preventing you from turning back to the credit cards in an emergency. Find out more about how much and where to save that money here.
  • Start saving for retirement. Here's another place where even a little progress can go a long way toward meeting your goals. Now's the time to start planning what you'll need in retirement, even if your goal remains pretty hazy for a while. You might not be able to save as much as you need to right away, but if $2 million is your goal, the dollars you put away at a younger age will have a lot more time to grow and get you there. At the very least, put enough money into your workplace 401(k) to get the maximum match from your employer. This is something you can probably do while also taking a bite out of your credit card and other debt.

Once you have your high interest debt taken care of and your emergency and retirement savings underway, it's time to look at your other goals. Want to buy a house? Want to kill off those student loans? Get rid of your car loan? Start working in those desires after you've tackled your high-interest debt, started your emergency fund, and gotten your retirement savings off and running.

Related Foolishness:

Fool contributor Mary Dalrymple welcomes your feedback.


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