Why GenY Might Be Too Frugal

A new book suggests that a fear of debt holds 20-somethings back.


In the new book Not Quite Adults, authors Richard Settersten and Barbara Ray examine why it takes 20-somethings longer to reach the traditional "adulthood" milestones of finishing school, settling into a job, getting married, and having children. They argue that the slow path might, in fact, be a better path, and that parents can play a key role in helping their adult children navigate the transition.


Drawing on research from the MacArthur Research Network on Transitions to Adulthood and Public Policy and 500 interviews with 20-somethings, Settersten and Ray reveal what is different about young adulthood today—and what to do about it. Among their key findings:

GenY has done battle with the economy.

"The tight job market is slowing down their path to adulthood even more," says Ray. "Young adults are saying, 'I just feel stuck.'" In addition to citing the challenge of finding a job, 20-somethings told Ray and Settersten they feel weighed down by student loan debt. Paying $500 a month toward student loans can make it harder to afford an apartment and other costs of living independently—which is one reason so many young people move back home after graduation.

They are closer to their parents than ever.

"Parents have been more involved in their lives," says Ray, referring to the "helicopter parent" stereotype. That closeness makes moving back home more appealing, too. Between 1960 and 2007, the proportion of young adults living at home with their parents grew from 22 percent to 28 percent.

They might be too afraid of debt.

The authors' research suggests that GenY is so frugal that they might take their fear of debt too far, and avoid even good investments such as college, home purchases, and small business start-up costs. "Many young people, especially those from lesser means, see the price tag [of college tuition] and think, 'Oh my god, I can't possibly take that on.' They could be shortchanging themselves,' says Ray, since college is an investment that pays off.

"They've heard Suze Orman loud and clear. That's part of the reason they move home—to save money," says Ray. She's started her post-recession interviews for a follow-up book, and found that her interview subjects meticulously avoid credit card debt.

That frugality could last a lifetime.


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Job-shopping is different from job-hopping.

Unlike "job-hopping," which implies a lack of control when bouncing from one gig to the next, "job-shopping" suggests a sound strategy for trying out different potential career paths. "Shoppers have a good path in mind and they're trying to get there. Every job shift is a shift towards a long-term goal. They might be in a job, have learned everything they can, and now it's time to leave," says Ray. Job-hoppers, on the other hand, have fewer credentials and feel stuck moving from one job to the next "in the chase for another dime an hour."

Ray and Settersten use the term "swimmers" to describe young people who are slowly getting ahead, and "treaders" to describe the group—the majority of young people—who are struggling. Whether it's due to a lack of parental support, becoming parents themselves early, or not finishing college, these treaders need the most assistance as they try to become adults, says Ray.

High schools can make it easier for students to figure out how to go from school to adulthood, for example, by pointing them toward higher-education programs that aren't necessarily four-year degrees but might lead to solid manufacturing jobs. "There are good paying jobs in the trades, but so many kids don't see those paths," she says.


"Even if they're living at home, it doesn't mean they don't want to get on this path to adulthood," explains Ray. They might be sleeping in their childhood bed, but they should still contribute to the household, by paying their phone bill, cooking dinner regularly, or helping out in some way.