January 2016, Price Waterhouse Coopers (PWC) and George Washington University Global Financial Literacy Excellence Center (GFLEC)
Is sounding the alarm really necessary?
With financial knowledge so essential to personal success, it is alarming to realize that many of us and our friends and family are struggling with financial issues and a lack of financial experience. For those born from 1980 through the mid-1990s, the challenges may be even more staggering; at least according to a new publication released by Price Waterhouse Coopers and George Washington University’s Global Financial Literacy Excellence Center.
When it comes to financial literacy, Millennials as a group may be lagging behind and it is having ongoing and potentially long-term effects on their ability to manage their finances. Without both knowledge and a consistent commitment to good financial practices, many Millennials find themselves falling into the same financial traps over and over again.
The PWC/GFLEC report highlights eight trends that its research found prevalent among Millennials; and the results are less than optimistic.
From the report:
Millennials have inadequate financial knowledge - When tested on financial concepts, only 24% demonstrated basic financial knowledge.
They aren’t happy with their current financial situation - When ranking satisfaction on a scale of 1-10, 34% were very unsatisfied.
They worry about student loans - When asked about their ability to repay their student loan debt, more than 54% of Millennials expressed concern.
The debt crosses economic and educational lines - Among college-educated Millennials, a staggering 81% have at least one long-term debt.
Millennials are financially fragile - Nearly 30% of Millennials are overdrawing on their checking accounts.
Millennials are heavy users of alternative financial services (AFS) - In the past five years, 42% of Millennials used an AFS product, such as payday loans, pawnshops, auto title loans, tax refund advances, and rent-to-own products.
They sacrifice retirement accounts - More than 20% of Millennials with retirement accounts took loans or hardship withdrawals in the past year.
Millennials are not seeking professional financial help - Even with inadequate knowledge, only 27% of Millennials are seeking professional financial advice on saving and investment.
The report delves into each of these eight trends in greater detail providing additional statistics and perspective. In the end, the report concludes that Millennials tend to engage in costly borrowing and spending behaviors which include credit cards, excessive student loans, borrowing from their retirement, and using alternative financial service providers like payday lenders and title pawn to serve as a bridge from paycheck to paycheck.
Check out the [full report] as well as [other research and articles] from [The Money Shelf], where we want you to know all you can know and go as far as you can go.