A survey by the FINRA Investor Education Foundation found that millenials (those born between 1978 and 1994) “display a number of problematic financial behaviors, display low levels of financial literacy, and express concerns about debt.”
The poor financial habits found in the study include:
- Only about 4 in 10 save for retirement (significantly lower than other generations)
- 12% do not have checking or savings accounts
- 43% have used non-bank borrowing (which includes payday loans, pawn shops, rent-to-own, auto title loans and tax refund services) in the last five years. The use of these services was not restricted to lower-income millenials, as 37% of respondents with incomes above $50,000 have also engaged in such non-bank borrowing.
Millenial survey respondents also demonstrated a lack of basic financial literacy, as measured by their responses to five questions about fundamental concepts of economics and finance. Only 24% could answer 4 or 5 questions correctly.
Survey responses also showed that financial literacy and health varied by demographics. For example, while 29% of men have high financial literacy, only 19% of women demonstrated high financial literacy. The survey found that the financial challenges did not vary by race with two exceptions, minorities are likely to spend more than their income and they are more likely to have student loan debt. The survey found that those respondents with dependents struggle more than their counterparts. Further, the survey found that unmarried millenials with dependents fared the worst, with 64% having engaged in non-bank borrowing and almost half engaging in 3 or more costly credit card behaviors.