A new survey finds that millennials lack basic personal finance knowledge, but calling that “disastrous” is overblown.
“Millennials have an alarmingly low level of financial literacy,” according to Yahoo! Finance.
Along with 80 percent of millennials holding major debt, such as student loans or credit card debt, and 30 percent of them overdrawing from checking accounts, some financial experts are worried.
“Only 24 percent demonstrated basic financial knowledge,” the survey found, which was conducted by PricewaterhouseCoopers and George Washington University.
“Lack of financial knowledge may jeopardize Millennials’ financial success,” the survey declared.
That concern seems irrelevant, though. Millennials, more than the prior generation, have entered the workforce at later ages than their parents. Pursuing a college degree doesn’t require millennials to delve into the details of a mortgage or investing. When millennials don’t have to worry about buying a home because they’re still living in a dorm, they won’t have intricate knowledge of mortgage rates.
Millennials have plenty of anxiety and concerns about their financial futures. The survey found that “millennials are financially fragile, meaning that they cannot cope with even midsize shocks” and that “millennials are unhappy but may not have the tools to change their situation. That anxiety, however, can drive them to better prepare themselves.
As housing prices remain high and outpace growing wages, millennials feel the squeeze. They have to prepare themselves for a tough economic world. After overdrawing a checking account and paying a fee for bounced checks, millennials have to sink or swim.
If millennials can’t pay off their student loans and credit card debt, of course, that’s a long-term problem for economic growth and financial stability. So far, they’ve taken after the rest of America. The average household has about $16,000 of credit card debt, after all. Holding debt isn’t a generational problem — it’s an American one.
When more millennials get working and confront financial reality, they’ll learn financial literacy quick. For now, it’s fears that create a false perception of millennial finances.
