The deep recession and slow recovery have caused financial stress for Arizonans of all ages. But in many ways, the downturn has hit young adults - many of whom came of age during almost 20 years of unprecedented U.S. prosperity - the hardest.

A tough job market, daunting student-loan balances, misuse of credit cards, the housing-market crash and reduced workplace benefits are among the challenges that have put many people under age 40 in a bind.

Will they be able to match the standard of living attained by their parents? Time, of course, is on their side, but for many, the middle-class dreams are on hold.

"This is the first time, for a lot of people in my generation, when things haven't gone their way financially," said Jacob Gold, a 32-year-old financial adviser in Scottsdale. "The last few years have been a real wake-up call."

Jobs and the housing market are at the root of the issues. Job losses, limited opportunities and paltry pay raises have made it difficult to pay off massive student loans. Many young adults bought their first homes at the peak of the housing market and have struggled to make payments on underwater mortgages. Beyond that, many battle debt because they have used plastic to survive tough times, or to live beyond their means, or both.

These workers have time - if they downsize their aspirations - to repair some of the financial damage, financial advisers say. But young Arizonans say that the recession will have a lasting impact on their middle-class dreams.

Many are retraining or adjusting their career plans. Some are delaying starting families. They are putting off saving for retirement or forgoing health insurance. Many rely financially on aging parents or, conversely, must help support relatives who lost their jobs.

Blindsided by crisis

Baby Boomers got a taste of a rough economy during the stagflation era of the 1970s. Their parents and grandparents grappled with stressful economic conditions around World War II and during the Depression.

But the past few years have been marked by the first prolonged financial crisis for adults now in their 20s and 30s.

Many younger workers were blindsided by the recession because they were certain they would find good-paying jobs and the housing market would keep going up, said Kimberly Bridges, manager of financial planning at Stoker Ostler Wealth Advisors, a Scottsdale-based affiliate of Harris Private Bank.

"A lot of people in that age group came into adulthood with a lot of confidence," she said. "They thought they could get a good education and - even if they had to charge it with student loans - they were going to come out making good money. They really thought that everything was going to work itself out and they were going to be able to pay off all this debt, and now they are hitting a spot where they can't."

Arizona shed about 12 percent of its jobs during the recession, about 324,000 positions, since the downturn began in December 2007.

The workers who lost positions had to defer or default on debts that they couldn't repay. Those who managed to cling to their jobs were making less money than they anticipated.

If they bought a house in Arizona within the past 10 years, they are likely making mortgage payments on a home that isn't worth what they paid for it. In addition, banks have clamped down on lending standards, making it harder for first-time buyers.

Making ends meet

For Ryan Hutchins, the wake-up call came in November, when he got laid off from his job at a local bank. His wife, Bethany, continues to work as a community-college instructor, but the loss of his income has caused stress for the Gilbert couple and their young daughter.

The family is renting a home from a relative, Ryan said, adding that neither he nor Bethany currently has health insurance. Nor do they use credit cards for purchases anymore.

"We had to go through our savings," said Hutchins, 36. "We had to liquidate what little we had in our 401(k) plans to make ends meet."

The couple also has debts - about $40,000 in student loans, more than $10,000 for credit cards and $2,000 for federal income taxes, he said.

Hutchins has started training to become an insurance agent. He credits the layoff for helping him find a career that he likes better, and he recognizes that he and Bethany, 31, have time to rebuild their finances. Still, he doesn't downplay the seriousness of their situation.

"Our biggest priority is in paying down debt and putting aside money for retirement and to buy a house," he said. "At times it gets you down, but I have to focus on the fact that my family needs me."

Special challenges

The recession scarred all generations, but several trends are making it particularly rough on young adults:

-�Unemployment has been running higher for young adults. Some 15 percent of people in the 20 to 24 age group were out of work nationally in March, as were 9.1 percent of those ages 25 to 34. Both rates were above the overall jobless level of 8.8 percent.

-�Changing employment trends make it much less likely that people new to the workforce will be able to stick with one job for most or all of their careers.

-�Employers have cut back on benefits, virtually ending traditional pensions for new workers while paring health coverage in many cases as well.

-� A slow-growth economy means that a two-decade stock market boom like Baby Boomers and their parents enjoyed in the 1980s and 1990s doesn't seem probable anytime soon.

-�The long-term viability of Medicare and Social Security is much less certain for young adults than it is for retirees and older workers.

-�The nation's yawning debt woes likely will need to be handled by people paying taxes in coming decades - and that means today's young adults.

Personal-debt issues

Meanwhile, many young adults have accumulated considerable personal debts. People in this age group grew up with credit cards, yet often didn't know how to manage them or receive the financial education to use them wisely.

Education costs also have taken a toll. College costs, which have been rising faster than the general inflation rate, now average more than $20,000 a year (including room and board) for in-state students at public schools and more than $40,000 annually at private institutions, reports the College Board. Among Arizonans with actual loan balances, the average student-loan debt is $27,960, reports Credit Karma, a free credit-management service based in San Francisco.

Plenty of young adults are graduating with five- and even six-figure debts, with dim job prospects.

Limits of bankruptcy

Diane Drain, a Phoenix bankruptcy attorney, said she has noticed more young adults facing financial stress than in decades past. She attributes that to various factors, from a tight job market to the often-reckless use of credit cards.

"It's not unusual to see someone with $25,000 to $30,000 in credit-card debt when they're not even earning that much in a year," Drain said.

Because of student loans, many young adults face a difficult time digging out of their financial holes. Although medical and credit-card bills, some car loans and some types of real-estate loans can be discharged in a bankruptcy, student loans can't be removed except in the most dire hardship cases, Drain said.

Consequently, many young adults have subpar credit scores. The typical Arizonan has a grade of 666 on the standard scale of 300 to 850, reports Credit Karma. But it's only 640 for Arizona residents between ages 18 to 24, and 649 for those in the 25 to 44 group.

Time on their side

Despite the pressures, young adults do have time on their side. People who will collect paychecks for another 30 or 40 years have the chance to learn smart money-management habits, watch their spending, save more and invest better.

Also, with the Internet, young adults have access to more and better financial information. Whether they use it favorably is a big question, though financial adviser Gold expresses optimism.

"One positive is that this is a generation that's very tech-savvy, innovative and entrepreneurial, with aspirations to create something," he said. "Given time and opportunity, they will blossom."