Americans who are looking to better their credit score should start early. According to a recently released study, Americans under the age of 47 have an average amount of debt totaling $37,000. Considering the importance of good credit and paying off bills on time, consumers should be vigilant in paying off their debts.
The study was the first U.S. Consumer Savings and Debt Report issued by SaveUp.com, a national online financial rewards program for saving and paying down debt. It showed that the Generation X and Y groups lead the nation in debt burden.
Americans who are considered to be in Generation X were born between 1965 and 1980 while the Generation Y consumers were born between 1981 and 1995.
Despite the amount of debt between the two generations being similar, there are still significant differences in the kind of debt that Americans have. Sixty percent of consumers from Generation X have debt stemming from mortgage and student loans, but are considered to be in a good position to build assets and job opportunities. On the other hand, Generation Y consumers have close to 49 percent in non-asset building loans, which is considered to be mostly bad debt.
"Consumers under 47 are still recovering from the Great Recession and are shouldering a disproportionate share of our national debt," said Priya Haji, CEO of SaveUp.com. "Faced with higher debt earlier in life does make it more challenging for the younger generation to establish a secure financial future. We need financial institutions, policy makers and innovators to work together to create solutions to help this next generation succeed financially."
According to the results of the study, Generation X and Yers have an average of $46,972 and $28,930 in total debt, respectively, compared to the national average debt load of $36,157.
Saving tips for young Americans
While young Americans find themselves wanting to be financially independent from their parents when they land their first job after college, it might not always be possible right away. Many college students are faced with paying off student loans and other expenses and unable to afford being completely independent, which makes a strict budget necessary.
Bankrate.com, one of the leading resources of financial news, recently gave tips to young Americans to make sure they are successful with saving their money.
The first suggestion is to begin a retirement plan with the first job landed. If the company you are working for offers a 401(k) plan, it's best to sign up for it as soon as possible to begin planning for your future. If the company you work for doesn't offer a 401(k) plan, the source recommends setting up a direct withdrawal from your bank account into an IRA, which will help you build basic savings for retirement without worrying about funds in the future.
The source also recommends using credit wisely and rarely, especially if you aren't able to keep the balance below 30 percent of the limit on the card. Saving money in order to meet financial goals instead of using credit is encouraged since you'll be much more content without having to pay off a large credit bill in the long run.