Schwab MoneyWise ®
Schwab MoneyWise®

Young Adults and Money Survey

The majority of young adults said they cared more about financial fitness than physical fitness.

The 2009 Schwab Young Adults and Money Survey1 found that the majority of young adults ages 23–28 considered "making better choices about managing money" the single most important issue for individual Americans to take action on. They believed it outweighed the need to strengthen family relationships (18%), protect the environment (11%), and improve personal nutrition and health (9%).

In fact, two-thirds of young adults said financial fitness was more important than physical fitness, and the majority believed that financial education in school, grades K–12, was more important than both physical education and sex education combined.

How young adults predicted their future success in comparison to their parents'
  • 23% Much more successful
  • 32% Somewhat more successful
  • 29% As successful
  • 13% Somewhat less successful
  • 4% Much less successful

"When we see people in their 20s prioritizing responsible money management over personal nutrition and health,” says Carrie Schwab-Pomerantz, president of Charles Schwab Foundation, “it seems clear that the need for individual accountability has penetrated deeply into the culture. Without diminishing the importance of good health, these results are very encouraging and could signal a new era of financial responsibility among American consumers."

But respondents did not feel that individuals were the only ones called on to change. More than one in three young adults agreed that the single most important action the administration could take to improve financial literacy in the United States would be to create incentives (or provide additional funding) for states that mandate personal finance in the standard high school curriculum. In addition, 36% believed that the administration should create economic incentives to encourage employers to provide holistic financial education for their employees and should fund a public awareness campaign for financial literacy to encourage parents to do a better job of teaching their kids money basics.

Young adults saw their "financial physique" as "flabby"

Young adults also showed some unexpectedly traditional views about personal finance. When asked to rank the relative importance of conflicting priorities, such as eliminating all debt vs. buying a new car, or saving as much money as possible vs. having as much fun as possible, they generally made the more responsible choice.

Yet despite these responses and their perception that financial fitness was more important than physical fitness, fewer than one in five considered their own financial physique to be "toned and fit." More than three in four young adults described their financial health as either "a little flabby" (55%) or "seriously out of shape" (27%).

This could have something to do with their behaviors. On average, those surveyed carried more than $14,000 in debt (excluding home mortgages). Of those who used credit cards, only one-third paid off their entire balance every month, while the other two-thirds made payments less reliably. Nearly 10% made payments only when they could.

With respect to this age group's self-assessed financial health, the survey uncovered gender differences as well. Women were more likely than men to describe themselves as "financially flabby" (34% vs. 20%) and were also more likely to believe financial responsibility should be a national priority (55% vs. 49%).

Many young adults are still financially dependent on their parents in some way

A large percentage of survey respondents said they were surprised to learn how much money it took to live independently as they "began to live life on their own."

Not surprisingly, only about half said they were financially independent from their parents. One in four still lived with their parents; of those, 28% were unemployed, while another 26% chose to live with their parents in order to save money.

Participants also relied on their parents in other ways as well. The majority attributed their knowledge of money management basics to their parents, with significant numbers continuing to turn to their parents for ongoing financial advice. However, many in this age group admitted they didn't feel adequately prepared to make good financial choices when it came to using debt wisely, saving for the future, or investing their money. And when asked which aspects of personal finance they wished they had learned more about before entering the workforce, living within a budget and the importance of saving rose to the top of the list.

Five tips for developing financially fit young adults

Parents can play an important role in influencing the financial behaviors of their children and adult children. Here are some tips that you can share to help them get on track:

  1. If they don't have a written budget, encourage them to create one and stick to it. If they need to cut back on expenses, they can start by eliminating "nice-to-haves," such as eating out, travel, and entertainment.
  2. Explain the importance of building an emergency fund to cover a minimum of three months of essential expenses—and advise them to keep this money easily accessible, such as in an interest-bearing checking or savings account. Depending on their job security and their assets, they may want to have up to 12 months of basic expenses in reserve.
  3. Teach them to stay on top of credit card debt and to pay off their balance every month, if possible. If they're carrying a balance, tell them to think about ways to reduce their interest rate. For example, can they negotiate with their credit card company or transfer the balance to a card with a lower rate?
  4. It's never too early to start saving for retirement. If they have a company-sponsored 401(k) or other retirement plan available, advise them to contribute at least up to the amount that will allow them to take full advantage of any employer match. They shouldn't leave this "free" money on the table. Ideally, if they can start putting aside 10% of their yearly salary in their 20s and keep saving at this rate throughout their working life, they should be in great shape when they reach retirement age. Remember, it's not only how much they have to invest but also how long they have to invest that counts. Right now they have time on their side.
  5. Remind them to protect themselves—and their finances—with adequate health insurance. Being young and healthy is no guarantee against an accident or unexpected illness.

Keep learning

Get the survey highlights, read tips for when adult children move back home, or see what other parents have to say about teaching finances in our Parents and Money Survey.


1. The 2009 Young Adults and Money Survey was conducted by Lieberman Research Worldwide on behalf of Charles Schwab. The nationally representative online survey polled 1,252 young adults between the ages of 23 and 28 using real-time sampling (RTS), a marketing research technique in which respondents were recruited in real time from a network of hundreds of prescreened websites. The survey findings have a margin of error of plus or minus 2.3 percentage points at the 90% confidence level.

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