Millennials, the generation of people born between the early 1980s and the mid-1990s are actually exceptional in many ways. They are better educated than their predecessors, more ethnically diverse, and more economically active. Millennials confront greater difficulties. Including, student debt, higher rents and mortgages per income levels, economic uncertainty and a very different job market to those who came before them.
A recent study found that among roughly 5,500 people aged 23 to 35, only 24 percent demonstrated basic financial knowledge. The researchers used data from a 2012 study that examined the ability of people of all ages to plan and manage money.
“Millennials owe a lot. They know too little,” Annamaria Lusardi, the academic director of the Global Financial Literacy Excellence Center, said in the study’s report. “Millennials’ struggle with debt may eventually become our problem, too.”
The majority of those tested in the study failed to prove they understood complicated financial issues like basic asset pricing and inflation. The study also showed that many in the generation also have expensive credit card habits and are already dipping into their retirement accounts for extra money.
Other Data indicate Millennials’ financial habits are diverse. While some research suggests millennials, are good savers, other research shows the extreme financial difficulties members of this generation have faced, causing them to fall behind other generations when it comes to being financially stable.
Since many older Millennials were just starting to spread their wings during the recession that began in 2007, and so many have been loaded down with the most student loan debt of any generation yet, this has caused a delay in many of the big moves people in their twenties and thirties might traditionally make.
Decisions such as buying a house, getting married and having children are goals that are further away for many Millennials than they were for prior generations, due to these financial setbacks connected to the economy and student loan burdens.
Another study, conducted by PricewaterhouseCoopers and George Washington University, found that Millennials in particular, have a shockingly low level of financial literacy. In addition, the survey found that due to this lack of financial literacy, Millennials could potentially wreck havoc on the U.S. economy. More than 5,500 Millennials born between the early 1980s and the mid-1990s were included in the research.
Millennials’ financial practices are of great concern because there is the potential for these behaviours to become firmly established. Indeed, research has documented that the gap between the amount of financial responsibility given to young Americans and their actual ability to manage financial decisions is rapidly widening. Furthermore, their knowledge deficit could prove disastrous for them, the economy, and society.
The way we can we help overcome this educational deficit is by expanding access to financial education with a focus on financial literacy. Starting this education in High School provides an opportunity to shift future generations’ financial positions and give them a solid base from which to make life’s important financial decisions.
It is with this in mind that NUU created it’s understanding money conferences.
Click here for details on our next conference.