Millennials desperately need a money manual

Lianna Inthavong
Nov 2 · 4 min read

As millennials take up the majority of the working class, how are they managing their money right? Reports show, they're not.

Hillary Hoffower, a financial behavior writer for Business Insider, reports millennials are financially behind from the, “fallout of the Great Recession, high costs of living, and staggering student-loan debt.”

The fact millennials are struggling with money is no surprise, but why are these factors making them lag so much? From this article, Hillary Hoffower writes about a recent survey Business Insider and Morning Consult conducted about the financial well-being of millennials and Gen X. The survey focused on their financial health, debt, and earnings.

Hoffower calls attention to the kind of debt the two groups are stressed about, “Gen X is most stressed about credit card debt, while millennials are most stressed about student-loan debt.”

The rising cost of tuition is making millennials stressed and the loans they are paying after their degree are making them reconsider if taking out loans was even worth it. The survey shows millennials are not only having a shortage of money for loans, but in general as well.

Millennials report being stressed about money in their marriage, and for those who date, single millennials also claim money is a problem for them.

The financial state millennials are in right now affects how they prepare for the future as well. Hoffower reports, “54% of millennials don’t have a retirement account.” This dilemma stems from the socioeconomic standards of their generation, but could have millennials been better prepared for their financial difficulties?

Another article from Business Insider by AnnaMarie Houlis claims only 24 percent of millennials are financially literate. A study conducted by the National Endowment for Financial Education reported this alarming statistic. Houlis also reports statistics from the Urban Institute and FNRA’S National Financial Capability Study that about 33 percent of Americans have debt in collections and nearly one-third of Americans pay the minimum amount of due on their credit card bills. These statistics support other research that millennials struggle with even the most basic understanding of financial discourse.

The lack of financial education millennials have ultimately cost them later in life (figurately and literally). Not having money for retirement or even emergency funds puts millennials at risk. Data from online lender Laurel Road that women are twice as likely to not have any retirement savings and are less likely to have emergency funds compared to men. Women struggle with finances more than men, but ultimately both groups are in need of proper financial education.

Houlis makes her point in this article by including a financial literacy quiz at the end of the article. She suggests millennials should know the answers to her quiz in order to combat the statistics mentioned earlier, and the questions she developed are concepts of economics and finances.

Can you answer these 15 financial literacy questions?

From a survey that was conducted by the Navy Federal Credit Union (NCU) and Forrester Research, it analyzed where millennials were putting their money and why they’re doing so.

Research shows the main bulk of income from millennials goes towards savings and paying off student debt as a second priority. As mentioned before, student debt is a huge factor of stress for young adults and just surpassed $1 trillion nationally in 2017.

Many young adults know saving money is important but they lack the tools to do so. Palash Ghosh, the author of this study says, “the overall theme of the report indicates a dramatic contrast: millennials remain optimistic about both their financial health and the state of the overall economy, but their personal financial habits do not inspire much confidence.”

Millennials need guidance for paying off their bills and saving money for the future. NCU recognizes this and points out that credit unions offer resources for members and it’s easier than millennials think. A unique support system NCU offers to its members is an online educational tool called ‘MakingCents’ that offers financial guidance.

NCU recognizes the lack of education millennials have for financial support and Ghosh claims more credit unions should adopt a similar educational tool for members. Doing so would make financial resources more readily available for millennials and they’d have a better chance at being more educated with their money — therefore making them better at managing money.

The fact millennials lack financial literacy is not a surprise, but whose fault is it? Is it the education system for not teaching high school students about basic money skills, millennials not putting in effort learning about finances, or the lack of resources available?

With that question in mind, it’s important to consider that something must be done. Millennials make the bulk of the working class, and knowing how to manage money to pay bills now and save money for later are essential life skills. This generation of self-driven individuals is shaping the economic world and sooner or later, they will learn how to finance their money.

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