David Lerner Associates: Millennials and Financial Literacy
Millennials are exceptional in many ways — better educated than their predecessors, more ethnically diverse, and more economically active, but according to a study published by George Washington Global Financial Literacy Excellence Center (GFLEC), even though they’re burdened with student loan debts and economic uncertainty, Millennials know little about personal finance. Liabilities are particularly common among those who are college-educated – an indicator that a college degree may no longer be a guarantee of a better financial future.
The study found that among roughly 5,500 people aged 23 to 35, only 24 percent demonstrated basic financial knowledge, while a meager 8 percent demonstrated high financial literacy. 34 percent of Millennials stated that they were dissatisfied with their financial situation.
According to Annamaria Lusardi, the academic director of the Global Financial Literacy Excellence Center, “Millennials owe a lot, and they know too little. Millennials’ struggle with debt may eventually become our problem, too.” Liabilities are particularly common among Millennials who are college-educated. A college degree may no longer be a guarantee of a better financial future.
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 have expensive credit card habits and are already dipping into their retirement accounts for extra money.
While this up-and-coming generation is better educated than those before, researchers said misunderstanding finances could jeopardize the economic security of young people, noting that about two-thirds of all Millennials carry at least one source of long-term debt.
Millennials are a high-impact generation poised to shape the national and global economy, and their influence is only expected to grow as time passes. But unless financial literacy becomes a part of their lives, their influence could prove to be a troubling one.
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