New families need to make smarter financial decisions because they are becoming much poorer as time goes on. Yesterday, I wrote about average family debt for an American and wondered if young families carried more debt than the median family debt of $75,600. I found the answer today and it is yes.
According to a report released by the New York Fed in 2007, families with parents under the age of 35 had a median debt level of $100,700. The age demographic with the highest median debt was those between the ages of 45 and 54 with a median debt of $148,500. Only those 75 or older carried a median debt level under the median for all families.
However, I was more alarmed by a report by the Pew research center showing that Generation X families are 68% poorer then Baby Boomers were at their age 17 years ago. According to Pew:
Pew’s data summarizes all wealth, which means total assets minus debt. The numbers hold up when looking at raw dollar amounts, Pew found. The average family headed by a senior citizen now has $170,494 in net wealth, compared to $120,457 among families of similar ages in 1984.
Younger families are headed in the opposite direction. The average family headed by adults under age 35 had $11,521 in assets in 1984. Today that has dwindled to $3,662.
Pew cites a number of factors challenging the wealth prospects of Generation X including:
- Waiting to be married,
- Taking longer to start careers,
- Inflated housing market,
- More college debt
- And rising student loans.
Hopefully this is a wakeup call for the millennial generation that is facing even more college debt, higher rates of unemployment and lower wages. Currently, they have roughly 33% less debt than Gen X families. It will take a lot of financial discipline to overcome the trend of poorer families that Generation X families have set.
Read More about Family Finance
- Money and Risk: When Parent’s Retirement Savings are Hijacked by Adult Children
- Free From Broke: Three Best Financial Moves You Can Make for Your Child
- Money Q & A: The Three Biggest Mistakes American Workers are Making
- Financial Success for Young Adults: Don’t Make the Mistake of Not Budgeting in College
- Families.com: Do You Have a Holiday Budget?
The Family Wallet: Ten Tips for Teaching Kids about Money