Thomas Sweetz: Even if saddled with student loans and other debt, start saving

Thomas Sweetz - Guest columnist

Young adults in the United States are having trouble managing their money and debt, according to a recent report by the Consumer Financial Protection Bureau.

More than half of young adults surveyed between the ages of 18 and 30 said debt is their “biggest financial concern.’’ Almost 90 percent also stated they do not have enough money to begin saving, while 80 percent indicated their main concern was to pay down their debt before setting money aside.

It is important for young adults to realize the importance of saving for retirement as well as paying down excessive debt. The trade-off is financial security over economic ruin.

For many young adults – college educated or not – credit-card debt has been increasing at an alarming rate, with many finding it difficult to pay off. Additionally, those who go on to college often assume debt from student loans. Overall student loan debt from government and private-lending institutions has reached more than $1 trillion, according to a survey by American Student Assistance.

Government cutbacks in education also have contributed to rising student debt even though colleges and universities are awarding additional grants and financial aid to help students attain their educational goals. Many graduates, meanwhile, are not finding the job market to be favorable in their fields of study, as salaries have been lower than expected. Repaying their loans can take decades, and many lack the means to pay it off in a reasonable amount of time.

As debt continues to rise, the economic implications are obvious: Young adults will have a difficult time obtaining loans in the future to purchase vehicles, secure their first homes, and properly provide for their families as they age. The decrease in this segment of society’s purchasing power also impacts the economy, especially during times of economic recovery. Perhaps more important, these young adults with debt are delaying saving for their futures.

According to a study done by the Pew Research Center, almost four in 10 households that are headed by an adult younger than 40 have some student debt – with the median debt load standing at about $13,000. In the 2016 Survey of Consumer Finances by the Federal Reserve, data show that young, college-educated adults who do not have any student debt have a net worth of $64,700 – or more than seven times the net worth of those with college debt ($8,700).

In short, households with student debt are accumulating less wealth mainly because they tend to have other types of financial obligations, such as credit cards, auto loans and mortgages.

Accumulating wealth has become harder in recent years, especially for young adults. According to the Federal Reserve, about half of current households headed by adults younger than 40 do not have enough savings to cover an unexpected expense of $400. The median household net worth has declined 21 percent.

Creating wealth still is possible. The question of where to begin, though, can be mind-boggling for many young adults. First, if you do not have any savings, begin immediately. Put something aside for an emergency fund, even if it is only a minimal amount.

Second, invest for your retirement. The earlier you start, the more you will have at retirement age. Talk to a financial adviser and set financial goals, both short- and long-term. Even if you start late, you still need to save and invest. Even a small amount can help you live more comfortably in retirement.

Lastly, get rid of, what I call “wealth-killers.” Payday loans, credit-card debt and auto loans are the main contributors to this group. Moderate amounts of student loan debt can get you the education you will need to boost your income. Mortgage loans that are reasonable also can help you build equity in a home.

Having wealth does not mean we stop worrying about our future. A major setback, such as losing a job or a severe decline in the stock market and investments, can have a detrimental impact on our lifestyle. The key is wealth management.

By reducing debt and saving for the future, you will be better able to weather economic storms and be able to have a more comfortable and secure lifestyle in the future.

Thomas Sweetz

Guest columnist

Thomas Sweetz is an instructor of business at Misericordia University in Dallas Township. For information, visit

Thomas Sweetz is an instructor of business at Misericordia University in Dallas Township. For information, visit