The High School Financial Planning Program® (HSFPP) will be retiring on July 31, 2021. Learn more about this decision.

NEFE-Funded Research

Exploring the Financial Lives of Millennials

In addition to providing curriculum for educators and resources for consumers, the National Endowment for Financial Education® (NEFE®) also funds research into personal finance and financial behaviors.

NEFE-funded research has included topics that affect Americans across the lifespan, from young children to retirees, with several projects in recent years focusing on the financial lives of Millennials.

Millennials (generally defined as individuals born in the early 1980s to around 2000) are the largest, most diverse and most educated generation in American history. On track to become the biggest share of the labor market, and with the oldest now entering their prime earning years, this cohort came of age during an economically volatile time marked by slow employment and income growth.

Most experienced a weak job market and many launched careers during the economic downturn. The resulting financial instability has created tension and stress at a time when financial products are increasingly complex, access to credit is high, debt burdens are growing, and economic inequalities are widening.

NEFE-Funded Research Exploring Millennials’ Financial Lives

Recognizing the importance of understanding Millennials' financial realities and behaviors, NEFE funded original research projects in recent years:

2014 Young Adults and Financial Capability Forum

In 2014 NEFE convened approximately 30 thought leaders, practitioners, researchers and policymakers to discuss the implications of the three NEFE-funded research projects. This conversation resulted in a white paper that outlines present implications, recommendations and next steps for the financial capability field to better serve Millennials and other emerging adult generations.

Findings show that Millennials and their finances should not be oversimplified. These young adults are coming of age in a rapidly changing financial landscape with shifting social values.

Although their financial outlook might appear bleak at first glance, the research finds clear pathways to financial success as well as foundational behaviors that can help Millennials thrive.

Notably, all three research projects revealed a link between finance and well-being, leading NEFE to believe that personal financial literacy should be part of a holistic approach to health and wellness.

Taken together, these studies reveal patterns that require our attention:

  • Formal financial education delivered at key decision points and throughout the lifespan is critical for success.
  • Family plays an important role in positive financial outcomes.
  • Financial health impacts well-being.
  • Debt is the defining feature of this generation. Millennials are burdened by multiple sources of debt and are financially fragile. 
  • There no longer is a standard route to adulthood. There are varying trajectories.
  • There is a lack of engagement with financial education and professional advice among those who need it most because they don't feel they can afford it or are not aware that they need it.
  • Millennials’ goals and expectations are being redefined in the midst of shifting values and contexts.

Where do we go from here?

Based on these research findings and the forum discussions, NEFE has outlined recommendations for the field, including emphasizing that formal financial education matters for successful outcomes. Specifically educators should: 

  • Deliver financial education early and often: The more financial education one has, the better, and in most cases one-time interventions are not going to produce the best results.
  • Make financial education relevant: Financial education that a student can apply to his or her own life will foster better engagement with the content and have a greater likelihood of changing behavior. 
  • Make financial education scalable: The most efficient and cost-effective way to make formal, curriculum-based financial education scalable is to offer it in schools and then enable students to find resources and information for later inquiries beyond the classroom. 
  • Mandate formal financial education in schools: If financial education is optional, there is an implicit message that it is not important. Mandates send a signal that financial literacy is valuable and worthwhile. 
  • Examine impact through improved evaluation: The financial capability field should both disseminate information on what we know works, as well as identify ineffective interventions. 
  • Take a comprehensive approach to effective financial education: An effective financial education program needs a well-trained educator and/or tested e-learning protocol; vetted and evaluated program materials; timely instruction; relevant subject matter; and evidence of impact. 

Implications for the Field

The forum attendees concluded that financial education interventions for young adults need to be designed in a more values-aligned manner and that the field should develop an accepted definition of financial wellness linked to overall health. This could mean exploring stress reduction as a motivator for behavior change, and making health correlations to situations and behaviors to increase engagement with financial education interventions.

Research provides us with a moment-in-time look at how this generation is faring financially, but the field must use these observations to inform its way forward. NEFE offers this research as a first step and encourages the financial education community — researchers, practitioners, educators and policymakers, alike — to collaborate and exchange gained knowledge as we serve the needs of young adults who now, more than ever, need to be financially literate and financially capable.