Millennials display low levels of financial literacy, engage in problematic financial behaviors and express concerns about their debt, a Finra Investor Education Foundation study reveals.
The study, The Financial Capability of Young Adults—A Generational View, found that low levels of financial literacy hamper most Millennials (age18-34), with only 24 percent of Millennials able to answer four or five questions on a five-question financial literacy quiz correctly. And among young Millennials – those 18 to 26 – only 18 percent were able to answer four or five questions correctly.
"Many Millennials began their adult lives in the midst of the worst economic downturn in generations, and our survey reveals just how deeply and broadly the Great Recession has marked the financial lives of this generation of Americans,” said Finra Foundation President Gerri Walsh. “Unfortunately, far too many Millennials trying to cope with these economic conditions have low levels of financial literacy and are wrestling with concerns about their debt."
Almost half (46 percent) of Millennials are concerned they have too much debt. This is slightly less than, but on par with, Gen Xers (age 35-49) at 50 percent – but much higher than the 38 percent of Baby Boomers (age 50-66) and 23 percent of respondents from the Silent Generation (age 67 and older) who feel they have too much debt.
Forty-three percent of Millennials engaged in costly non-bank forms of borrowing in the last five years, like using pawnshops and payday lenders, the study found. By contrast, 35 percent of Gen Xers, 21 percent of Boomers and 8 percent of the Silent Generation used non-bank forms of borrowing.
Just 23 percent of Millennials expressed satisfaction with their personal financial situation, on par with Gen Xers (17 percent) and Boomers (25 percent), says Finra. The Silent Generation scored higher, with 42 percent being satisfied with their financial situation.
The Finra Foundation's study is based on an examination of data from the Finra Foundation's National Financial Capability Study (State-by-State Survey). The online survey of 25,509 American adults was conducted from July to October 2012.