Why the Financial Crisis is (Mostly) Good News for Gen Y

I called my 23-year-old son a couple weeks ago, in part as a pleasant distraction from the hypnotic horror of watching our stock portfolio vaporize. After a bit of general catch up, I asked him how his business – he’s a cinematographer in the independent film industry – was looking.

“You know,” he said, “It’s looking a little light. What’s going on?”

“Ah, you haven’t had a chance to catch Jon Stewart lately, huh?”

“Nope – filming at night. Is something up?”

“Well, not ‘up’ exactly, but certainly there’s been something going on.”

And here’s the irony. Despite a slowdown in immediate career opportunities, the current financial crisis is likely to reinforce the overall happy, fortuitous economic life of Generation Y.

Here’s why.

Fresh from a childhood of generally positive economic times, many Y’s are not currently in a heavy money-oriented phase of life. They’re in a time of learning and exploration, content in the knowledge that they have long lives ahead to “make it big” if that’s what they choose to do in the end.

Unlike Xers, many of whom are currently struggling to balance mortgage payments, child care expenses, and other “adult” responsibilities, most Y’s have not yet taken on these financial commitments.

And unlike Boomers, who are racing to build up a nest egg before retirement hits and in many cases trying to make up for a life of limited savings, Y’s have no such time pressure. The key job challenge for Y’s in this job market will be to find the challenging opportunities for learning that they crave. In many ways, their greater financial flexibility may give them an advantage over older generations for some of the interesting opportunities.

Their timing for asset accumulation couldn’t be better – assuming they take advantage of it now. The bad news is that most Y’s have not taken advantage of their company’s 401(k) or other long-term savings options. The good news is that they had nothing to lose over the past months. And, assuming they do get going now – which they certainly should – they will be getting in at the bottom, with long years ahead to ride the market up.

The housing market, when they decide to enter, should tip in their favor. Unlike members of Generation X, whose timing for home ownership could hardly have been worse – they bought when prices were high, driven up by a huge bulge of home-buying Boomers–Y’s will likely buy after the much smaller cohort of Xers will have left the market glutted with a surplus (particularly of big trophy homes) and lower prices.

And, of course, unlike older generations, many Y’s have a comfortable security net – the option of returning home and minimizing expenses by living with Mom and Dad, if things really go south.

You lucky Y’s! Now go open that 401(k) — today.

Source: Tamara J. Erickson @ Harvard Business Publishing