I have decided to try to start bloging again. I was inspired by a recent book I was browsing in the library Strapped by Tamara Draut. I have not read the whole book, but it seems the major thesis is that it is more difficult for today’s young adults to get financially ahead. In particular, she points out large college loans, higher health care and child care costs, and today’s consumer driven consumption as causes.
So are costs increasing faster or income more slowly than other age groups. I cannot find separate inflation figures by age. However, the Bureau of Labor Statistics, which calculates the inflation rate recently calculated inflation for those over 62 years old and find from 1998 to 2005 (link here) and found in that 8 year period inflation for that age group was 24% compared to 22% for everyone else. This was mainly driven by increases in health care cost. If the BLS did the same thing for adult 25-35, my guess is we would find slightly higher, but not dramatically different inflation rates driven by increases in college tuition fees, which young adults are still repaying in loans. In that time period college costs increased 60% compared to medical expenses which increased 40%. My guess is there are not huge differences in terms of income either. It is probably more on the growth in loans/credit card debt to young adults, who might over extend themselves.
Unrelated, Strapped also suggested that debt was caused by overspending, but also by unexpected spending like trips to wedding and family gatherings. I never thought about how an unexpected trip can really throw someone off financially. Some tips to save you on your next outing can be found at The Simple Dollar, a personal finance blog I have been reading lately and highly recommend.
