March 20, 2014
Money Habits Set Millennials Apart
Millennials, now in their 20s or early 30s, are ethnically more diverse and better educated than any previous generation. They also demonstrate different financial behaviors that may partly reflect new trends in society and in technology.
Millennials’ financial struggles are a natural consequence of being new entrants to the labor force. Two-thirds of them earn less than $50,000 annually, and they are more likely than Generation X (now mostly in their 40s) to spend more than they earn, according to the FINRA Investor Education Foundation’s newly released survey of some 25,000 adults of all ages.
But FINRA’s survey provides clues to the financial habits that may set Millennials apart from previous generations:
- More than one in three has taken on debt for college. The share rises to half of Millennials who are either full-time or part-time students.
- Millennials are slightly more likely than prior generations to be offered financial education and to participate in it. Millennial men have higher financial literacy than their female peers, but this gender gap has shrunk from prior generations. This improvement still might not offset the greater need for financial capability, due to their higher student debt levels.
- Millennials also have different day-to-day financial habits. For example, 12 percent do not use a traditional bank – more than any other generation, including GenX (7 percent). One out of three higher-income Millennials use the high-cost services of pawn shops, pay-day lenders, and the like.
- They’re also two times more likely than Gen-X to pay for purchases with their cell phones: 13 percent of Millennials do, compared with 7 percent of GenX.
FINRA’s full report, “The Financial Capability of Young Adults – a Generational View,” is available here.