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Debt enhances your self-esteem?

By Crissinda Ponder ·
Wednesday, July 18, 2012
Posted: 12 pm ET

How is it possible that a young adult can find self-esteem while carrying a mountain of debt on her shoulders? Bah, Humbug!

According to research conducted by Ohio State University's Rachel Dwyer, young adults aged 18 to 34 derive self-esteem from being in debt. Get this: The more debt a young person has, the more his or her self-esteem grows.

Debt is often required to receive a college education, of course, and has become a mark of being "smart enough to get through college," according to financial planner Rick Kahler, who was quoted on the Squared Away Blog regarding Dwyer's research.

Dwyer's research also found the link between debt and self-esteem is prevalent for young adults from low-income and middle-class groups. The link is weakened among members of the upper class.

We live in a materialistic society, so acquiring things – even if they are acquired through debt – can give one emotional security and/or attach them to a higher status. But buying something because it makes you feel better raises a bigger issue – one that needs its own discussion on another day, the blog post suggests.

Parents have an influence on the way young adults view debt; they are likely to follow their parents' financial attitudes, according to Squared Away's blog post. But the glamor of charging up a credit card to fund a certain lifestyle wears off when, in the years after graduation, pay-back time comes around.

By the time young adults reach age 28, the sheen of self-esteem dulls down, Dwyer's research found.

Learn more about debt management at Bankrate.

Crissinda Ponder is an editorial intern for Bankrate. Follow her on Twitter @CrissiPonder.

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