It is often the stigma that millennials, those ages 20 to 34, are unaware of basic financial literacy skills and that it is a generation rooted in spending rather than saving. Millennials are the most educated generation and having grown up in the age of technology, have all the tools available to them to lead a successful and financially secure life. Why then do they decide to buy all the latest and greatest rather than put their money into savings?
A research study at George Washington University of more than 25,000 millennials reported the following results:
- More than 70% have at least one source of long term debt
- 90% have a checking account, 25% of whom overdrew within the past 12 months
- Over half of Millennials who have a credit card engage in some form of expensive credit card behavior
- Only one-quarter of respondents show basic financial literacy
For a majority, accumulated debt far surpasses net wealth in assets making it even more difficult to acquire savings. As compared to when baby boomers were young adults, millennials have half as much wealth. Boomers earned higher incomes, held more assets, and owned homes sooner. Millennial workers today earn 20% less than young adults in 1989 meaning there’s some catching up to do.
According to a report by Beth Ann Bovino, Standard & Poor’s U.S. chief economist, the millennial generation could potentially hurt the U.S. economy in the next five to ten years. By deciding to marry and have kids later on, live in cities instead of owning cars, and renting homes rather than buying could significantly stunt GDP growth in consumption. Since millennials, who number 80 million people, occupy such a large portion of the population, it is essential that they become more educated about basic financial skills for the sake of their own futures as well as the U.S. economy.