Financial Literacy and Millennials
While Millennials are a generation that is exceptional in many ways - better educated than their predecessors, more ethnically diverse, and more economically active - according to studies, they struggle with personal finance.
And with this generation carrying new financial responsibility, it is critical for them to be on a well-informed path toward fiscal security.
Here are some interesting financial habits that put young adults in a less than ideal financial situation:
Millennials have a larger delinquency rate on their bills compared to all other ages. According to a recent study by the American Institute of CPAs, more than a quarter of Millennials surveyed had missed a bill or been contacted by a creditor due to late payments. At the same time, Experian recently announced that Millennials, as an age group, have the lowest credit scores.
One issue is that Millennials move more frequently thus changing their physical address, and yet they don’t change their account details with creditors. As a result, they can miss bills and payments.
An essential part of financial literacy is being well informed about all of your financial interests - debts and assets. With Millennials, this doesn’t seem to be the case.
It would seem that Millennials are borrowing blindly, according to the Brookings Institute. About half of all first-year students in the U.S. seriously underestimate how much student debt they have, and less than one-third provide an accurate estimate within a reasonable margin of error.
Failing to accurately understand the amount and type of debt you have can have disastrous results, especially because it opens the door to not paying off the debt. This can result in poor credit scores, which in turn will harm your ability to buy a car, rent an apartment, or even buy a house in the future.
Millennials are an important generation, poised to shape the national and global economy, and their influence is only expected to grow as time passes. Financial well-being and literacy is well within their reach with a little financial education and organization.
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