Millennial Financial Literacy (or lack thereof)

I ran across this research and felt it was worth sharing.  Apparently, and not surprising to me (from my own personal experience,) millennials are pretty terrible within the realm of personal finance; I, myself, was oblivious until a year-and-a-half ago, at the age of twenty-seven.  While there are those of us out there who have been getting it right all along, by and large, that is just not the norm.

George Washington University, supported by PricewaterhouseCoopers (PwC,) compiled data from the 2012 National Financial Capability Study, analyzing over 5,500 responses from people ranging in age from 23-35, in order to gain understanding of decisions that are threatening Millennials financial security.   What they found was that, on average, millennials don’t know much about finance to begin with; in fact, only 24% of those surveyed had “basic financial knowledge.”  On a positive note, “8% demonstrated high financial literacy.”

Additionally, 34% of millennials are unhappy with their current financial situation, over 54% are concerned about their ability to repay student loans, 30% overdraw their checking accounts, and 42% utilize what are known as “Alternative Financial Services” (e.g. payday advances, title loans, and rent-to-own services.)  Furthermore, of those who actually have some retirement savings (only 36% of us!), 20% have taken loans from their accounts in the past year.  53% carry credit card balances from month-to-month and half of us couldn’t even come up with $2,000 for an emergency.

Part of the report’s conclusion reads:  “Millennials’ financial practices are of concern because of the potential for these behaviors to become firmly established. Indeed, the research has documented that the gap between the amount of financial responsibility given to young Americans and their demonstrated ability to manage financial decisions is rapidly widening. Furthermore, their knowledge deficit could prove disastrous for them, the economy, and society.” – underlined emphasis added by me.


Some additional information on the subject:  according to Survey of the States, only 17 states currently require a high school level course in personal finance and 20 require a course in economics.  Standardized testing in economics is only required in 16 states, a drop from 27 since 2002.  Is it just me, or does the timing of these changes occurring since the passage of No Child Left Behind (NCLB) seem a bit coincidental?  By 2010, nearly 40% of schools were lagging behind in the requirements of the law, leading the Obama administration to issue waivers in exchange for implementation of Common Core, aimed at “preparing students for higher education and the workforce” (edweek.org.)

Here’s my point…how does a program aimed at improving the education of our nation’s children (myself included) result in a decrease in curriculum that would do that very thing?  With the required standards, schools inability to reach them, and consequences associated with not reaching them, schools were essentially forced to “teach the test,” thereby spending less time on subjects not found on the standardized tests themselves.


So how do we solve the problem?  EDUCATION!  Obviously, we can’t solely rely on the school system to teach us and our children about personal financial matters.  That responsibility, as it should in my opinion, falls on our shoulders as parents.  According to additional information from Survey of the States, 72% of parents are reluctant to talk to their kids about family financial matters.  We must break this cycle, educate ourselves and our loved ones, and without a doubt, talk to our children about money and how to utilize it responsibly so that they may grow up and make sound financial decisions.  We must get ourselves on the right track and raise our children with a solid foundation that will help them to not make the same mistakes that we have made.


As you are sending your children and their young minds out to school this morning, I ask you this:

  1. If you are a parent with school-age children, how do you feel your child’s or children’s school system is fairing in their education, both as a whole and on topics such as these (i.e. personal finance)?
  2. Are you homeschooling?  Why have you chosen to do so?
  3. Are you educating your children at home about personal finance in conjunction with state schooling?

What are your thoughts?  Happy Monday!

 

-Frugal RN

 

 

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11 thoughts on “Millennial Financial Literacy (or lack thereof)

  1. I couldn’t agree more — except I’m not sure this is entirely a new thing? As a woman solidly in Generation X, I know I didn’t get much financial education either. Some of my friends from high school did well (or the appearance of well) professionally, and seem to have the accoutrements of financial well-being; some are struggling, have filed for bankruptcy multiple times, are barely keeping their heads above water. Given my own position, I wouldn’t be surprised to learn that the ones who look like they’re doing well are carrying a good bit of debt.

    You’re absolutely right, both the schools and parents are failing to teach a solid foundation in financial literacy, and I think the taboo against speaking about financial issues is at the heart of it. If there’s so much pressure to look like we’re doing well, even when we’re not, that’s a breeding ground for debt. Throw in a shaky economy, a widening gap between upper and working classes, and a healthy dose of reality tv, and it’s not at all surprising how little we understand about being money-smart.

    But good for you for speaking about money publicly! I started a YNAB budget for my 11-yr-old but it’s difficult following through when he’s with me only half the time. I’m hoping that showing him how I manage my money (now) will help him as he gets older and gets his first jobs. His father and I have struggled with the idea of giving him an allowance (I’m for, he’s against) but he does have money from his lawn-mowing, leaf-raking and snow-shoveling jobs. Maybe there should be courses available to help parents teach their kids!

    Liked by 1 person

    • Wow you just said literally everything, and then some, of a post that I am currently working on and have sitting in my draft box! With regards to your seemingly well-off classmates, I must quote an incredible movie by the name of Fight Club: “Advertising has us chasing cars and clothes, working jobs we hate, buying shit we don’t need.” As far as courses to help parents, an excellent book I own and read this past year is called Smart Money, Smart Kids that Dave Ramset wrote with his daughter; it’s an excellent resource on various topics and how to introduce financial lessons as our children age. I even think it would be awesome to put together a community gathering at a local library or other setting to discuss these topics. Like you mentioned, taking the taboo out of discussing money is paramount to educating everyone. You’re comment was spot-on; thank you so much for commenting!

      Liked by 1 person

      • I will definitely check out that book! And I’ll also ask around among Luke’s friends’ parents, to see if there’s interest in at the very least an online forum to talk about these issues. Great idea!

        Liked by 1 person

        • Sounds like an excellent idea! I bet you’ll be surprised how many parents share your concerns. Plus, you can give them all kinds of suggested reading material in the likes of our blogs (*thumbs up*) Let me know how it goes! 🙂

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  2. Well with my three(note their father died when they were young and their step father died when they were in highschool and college) financially responsibility was a must for them because I was digging myself out of a deep whole and they needed to help and work and save. My rule from the time they were little was they had to donate 10% of any money received, they had to save 50% and could spend the other 40%. There were no if ands or buts about it. These were the rules for all money even when they started working.
    My son is a teacher but lived at home until he paid his school loans of. It took him till he was 24. My middle one lived on campus but went to the school that offered her the most scholarships and grants. My youngest is going to be a RN. She lives at home and works at a gym and a hospital. The hospital has already said they will pay a certain amount of her loans every year she agrees to work there and she will be continuing beyond her BSN to to to school for trauma and surgical nursing on their dime.
    When they lived at home they were responsible for a utility. Its amazing how quickly lights are turned off when you have to pay a portion. They also learned from a early age to eat or starve. We do not waste food so they will eat anything put in front of them. My Uncle instead of giving them toys gave them government bonds or stocks.

    Now I called my son and he wishes they would teach finances in grade school(mind you he teaches 1st grade) but it is never to early to learn. Yes they learned from my mistakes and the rules I laid down so they would not fall in the same trap but if this was taught in school I think it would make a big difference. But on the college level I blame the colleges and the government for setting up a system where they take classes they don’t need and have to borrow money to pay for these classes. In fact most colleges push you to borrow more and more. I remember fighting with my daughters college because I refused to let her finance her dorm or meal plan. I paid that out of hard earned cash. And all of them paid for used book when they could.
    I fear for some of my childrens friends and the amount of debt they have. Will they ever be able to buy a house? Or will they forever be in debt. Woops there I go off on a tangent again.

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    • First off, I would like to express my apologies for the loss of your husbands; without a doubt, that would’ve made for difficult circumstances in a variety of areas of your life. However, it sounds like you did a wonderful job giving your kids a solid foundation in personal finance. If your daughter still ends up with debt not covered by her employer, and if she’s willing to relocate to some often rural places of the country, she should check out Indian Health Services, a division of the Department of Health and Human Services with the federal government. Due to the rural nature of most facilities, as well as the difficulty they have with staff recruitment, there is an amazing Loan Repayment Program that pays $20,000 per year towards student loans for an initial two-year contract, with the option of extending on a year-to-year basis if any loan balance remains. The actual payout per year is a little over $18k, as FICA is taken out; but they pay $4k towards federal income tax so that does not end up coming out of the recipients pocket at tax time.

      With regards to your son, perhaps he could introduce new curriculum ideas for his school system at school board meetings. These are public meetings and could also present some valuable information to parents that may be in attendance. Or maybe he could even incorporate basic personal finance into his math lessons. With regards to his student loan debt (if he has any,) there are also options for him to get assistance through programs such as Teach for America. I don’t know any specifics on them but that is something he could look into.

      As far are you third child, I don’t believe I’ve ready anywhere what it is that you said he does…so I have zero advice on that one! 🙂

      Thanks for sharing!

      Liked by 1 person

      • Thank you I will pass it on to her. I hope you get this as my blog posts have somehow vanished and I am trying to find them.

        My son teaches at a Catholic School BUT he lived at home until his loans were paid off. My youngest is doing the same. My middle one is going for her Masters but the museum will pay some of her loans back each year.

        My biggest fear was that my children not make the same mistakes I did and except for a few mistakes they haven’t. And thank you for your condolences.

        Liked by 1 person

        • You are most welcome on all accounts; I hope your daughter finds the information helpful. And I’m very sorry about your blog posts – I just checked and they are working from my end of things…??? :-S

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  3. I have two adult sons. One is making good money and working with the state in computers. The other is an artist and delivers take out orders for a delivery service. He makes really good money but there’s no sick time, no vacation time and…no retirement. He is marrying his sweetheart who is a vet though. So I am hoping he will be okay.

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