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Want to Feel More Confident? Get Into Debt!

The way Millennials view money is something that has been the subject of much interest lately, since money habits are changing as a result.

From marriage [3] to the way they accomplish internships [4], to gap years and whether or not college is the right decision [5], Millennials seem to be doing things a little differently from past generations. And that even includes the way they get into debt — and the way that debt is viewed.

Debt = Confidence

A couple of years ago, Ohio State University conducted a study as part of the National Longitudinal Survey of Youth 1979 [6], which has been going on for decades. The results of this study focused on how young people view debt. While many of us feel that debt — especially consumer debt — is a Very Bad Thing, it appears that those aged 18 to 27 actually enjoy high self-esteem because¬†of debt.

On top of that, many of the respondents in that age group actually felt more in control of their lives as a result of having debt. The more debt, the more in control young people felt. That’s a stark contrast with the many who feel as though debt leads to less control over their lives.

However, as the respondents’ ages increased, they did begin to feel anxiety about paying down debt [7]. Those in the age group 28 to 34 felt anxiety about their debt, and the ability to pay it down. But, until things start looking serious later on, young people are more likely to feel a self-esteem boost from their debt.

Student Loans and Consumer Debt

The Ohio State study focused on credit card debt and college loan debt. Researchers had thought that perhaps there would be a difference, with Millennials reporting that they felt better about student loan debt (it represents an investment in the future) than credit card debt. Interestingly, though, the researchers found that respondents didn’t feel any worse about credit card debt than student loan debt.

In both cases, students, especially those in lower income groups, felt better about themselves, and their control over their situations, no matter what type of debt they had. Some of the researchers speculated that the credit card debt allows young people to live a higher quality of life, and enjoy instant gratification. Feeling as though you can “afford” whatever you want — whenever you want it — can be a powerful thing.

Socioeconomic Differences

One of the things I found most interesting was the differences in how debt made those from different socioeconomic backgrounds feel. Those in the middle class didn’t get the same boost from holding student loan debt as those in a lower income bracket. And, although middle class young people felt a boost from credit card debt, it wasn’t the same boost felt by their poorer counterparts. The study found that debt didn’t provide a boost to those from wealthier families.

The results seem to indicate that debt allows those who grew up with fewer financial resources make up for what they perceive as a loss, and that is what helps boost self-esteem and a feeling of control.

What do you think of this study? Do you think debt would boost your confidence? Or you in an age group that sees debt as a problem?

(Photo: Images_of_Money [8])