Millennials: The Special Generation

Member of Millennial generation

Who Are Millennials?
Millennials are the 70-80 million individuals born between the late 1970s and the mid-1990s. The National Endowment for Financial Education® (NEFE®) funded a study by the Global Financial Literacy Excellence Center at George Washington University to assess this generation’s financial engagement and potential risks by analyzing data from the 2012 National Financial Capability Study (NFCS).

The “Special” Generation
Where prior generations were preferably seen and not heard, Millennials grew up in an era that placed unprecedented value on children. Their parents prioritized personal development and self-esteem, leading many in this generation to possess buoyant optimism and supreme confidence in their own abilities. This means that Millennials have loftier dreams — and the potential for steeper disappointments — than their predecessors.

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Shifting Responsibilities
Millennials are going to need that confidence to tackle the myriad financial challenges they face. Where their parents entered adulthood with hardly any debt, or with “good” debts such as home mortgages that quickly became assets, many Millennials now take their first steps into independence already saddled with huge amounts of student loan debt, which only becomes an asset if it can be turned into a profitable career.

Faced with a big debt management problem from the get-go, Millennials also now must handle their own retirement planning and health care costs, benefits that traditionally were covered by employers. Finally, record-high living costs in many American cities and slow wage growth mean that many in this generation struggle just to make ends meet, let alone pay down debt and save for the future.

The Financial Education Gap
In general, Millennials seem to think they know a lot more about personal finance than they actually do: out of five financial literacy questions on the NFCS, only 8 percent of Millennial respondents answered all questions correctly, despite the fact that nearly 70 percent rated themselves as having high financial knowledge. Not surprisingly, the data also reveal that only 22 percent of Millennials (and 29 percent of those with college degrees) have ever received financial education from an educational institution or workplace.

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See the full Spring 2016 Digest or download the PDF.


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