Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP® Joel Ohman

UPDATED: Feb 22, 2013

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A new report found that younger generations carry an average debt load of nearly $40,000.

The U.S. Consumer Savings and Debt Report, published by SaveUp, states that Americans under the age of 47 carry an average debt of $37,000.

Euna Kim, marketing and support coordinator for SaveUp, said the rewards program decided to focus the report on the younger generations because “there is significantly more coverage on consumer data of older generations like Baby Boomers.”

Generation X is classified as being born between 1965 and 1980. Generation Y is classified at being born between 1981 and 1995.

Generation X has an average of $46,972 in total debt and Generation Y has an average of $28,930 in total debt. The national average debt load is $36,157.

SaveUp CEO, Priya Haji, said consumers under 47 are still recovering from the Great Recession and currently shoulder a disproportionate portion of the national debt.

“Faced with higher debt earlier in life does make it more challenging for the younger generation to establish a secure financial future,” Haji said in a release.

For Gen X respondents with debt in the following categories, each has an average of $181,706 in mortgage debt, $44,270 in student loans and $8,801 in credit card debt. For Gen Y, they hold an average of $161,000 in mortgage loans, $40,273 in student loan debt and $4,113 in credit card debt.

Kim told that a large percentage of Gen Y does not yet have a mortgage when compared to the older Gen X population, which creates the difference in the average debt balance between the two age groups. Additionally, some members of Gen Y have yet to finish or enter higher education, so they have not begun repaying their student loans.

‘Debt is not inherently bad’

Asset building debt includes mortgages and student loans because the types of loans offer collateral and room for future advancement.

Although the student loan debt balance is increasing daily, Kim said that for more students, the “only way to access higher education is through taking on a student loan.”

“Education is a key indicator of increased future earning and increases professional options for students,” she said.

Kim warns students to utilize their loans for their original purpose. Utilizing student loans for other non-education purposes can lead to more debt in the future, including increasing personal loans and credit card debt.

“Student loans are an important good debt tool, but it is never a good practice to spend that student loan on a shopping spree,” Kim said. “If you do not need the loan balance for your true basic educational and living expenses, don’t add to the balance.”

Beyond asset building debt, younger generations have accepted consumer non-asset building debts. Non-asset building debt comes from loans such as personal loans, credit cards and auto loans.

“Consumption oriented debt has maintained a strong hold among Gen X and Gen Y consumers,” Kim said.

A key fundamental for younger generations is how debt is used.

“Debt is not inherently bad, but can be easily misused,” Kim said. “If used correctly, debt can increase your ability to increase earnings, or secure a place to live in your retirement. But debt to fund coffee, shoes, and vacations is the wrong approach.”

She said young consumers should monitor their levels for consumption-related debt.

“If they need to take on debt, they should use it wisely for education which can drive future earnings or for purchasing a long-term asset like a home at a non-inflated price,” Kim said.

She continued stating that although early consumption is tempting, young consumers should focus on building savings instead.

According to the report, only 32 percent of Gen X are investing and saving for retirement. For Gen Y, 29 percent are putting their funds into long-term savings accounts.

“Both short-term and long-term savings will be critical for long-term financial stability,” Kim said.