Graduates Struggle for Autonomy

If buying a house or having children were once hallmarks of being a grown-up, something more basic marks a successful transition to adulthood today: financial self-sufficiency.

Only half of more than 1,000 freshmen who entered the University of Arizona in 2007 and were tracked over time by researchers Joyce Serido and Soyeon Shim were employed full-time in 2013.  And only half of these full-time workers, ranging in age from 23 to 26 years old, supported themselves without help from family members.

These young adults, mostly graduated, overwhelmingly said that achieving financial independence was critical, according to Serido and Shim’s new report, “Life After College: Drivers for Young Adult Success.” But achieving independence has been difficult due to unprecedented borrowing for college and a post-Great Recession job market that’s been described as “bleak” for young adults.

While the economy certainly poses hurdles, the report concludes that too many young adults fail to take responsibility for their personal finances.  Recent graduates were grouped into three levels of financial behavior: high-functioning, rebounding, and struggling.   Which one is you or your child?

• High functioning: 12 percent of the young adults tracked exhibit an understanding of the link between responsible financial behavior and success.

“You don’t have to worry about them. They were probably saving their money since they were 5,” Serido said in an interview. The problem, she said, is “there aren’t many of them.”

• Rebounding: 61 percent made financial mistakes while in college, especially senior year, but now shows signs of learning about personal financial management.

These young adults “are going to be okay, but they’re going to learn it the hard way,” she said.

• Struggling: 26 percent demonstrated deteriorating financial behaviors throughout the study, acquiring little financial knowledge and failing to master basic practices such as paying bills.

“Instead of managing their money, it manages them,” the report concluded.

Serido said the large group of strugglers is worrisome.  “There are too many young people who don’t understand that when you leverage yourself out – whether it’s time, energy or money – you’re setting yourself up to be vulnerable,” she said.  “How do you get people to start listening?”