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NEFE-Funded Research

Overconfident and Underprepared: What Millennials don't know can hurt them

America's largest, most diverse and most educated generation is challenging traditional milestones (such as marriage) and shifting cultural norms around work, transportation, travel, technology and entertainment. 

The NEFE-funded, conducted through George Washington University, analyzes financial capability among young adults. Researchers concluded that while Millennials have a very optimistic outlook and confidence in their ability to manage their financial lives, their actual capabilities may fall short.

In terms of access to and use of financial tools and instruments, the majority of Millennials have a bank account and a retirement account. A smaller percentage own their homes and possess a college degree. And nearly one third have financial investments.

That’s the good news.

The not-so-good news? Many Millennials are unprepared to handle financial shocks, such as a lost job or serious illness, with more than 70 percent reporting a source of long-term debt and one quarter reporting that they’ve overdrawn their checking account within the last 12 months.

The majority of Millennials reported confidence in their financial skills, however only seven percent show a high school level of financial literacy knowledge, and less than one quarter have participated in some form of financial education.

The study concludes that the gap between Millennials’ financial confidence and capability will continue to widen until financial education becomes a priority among young adults and those who intervene on their behalf.

Millennials and Money Good News 93% banked, 60% have a retirement account, 45% own their own home, 28% have financial investments, 44$ have at least a bachelor's degree Millennials and Money Not so Good over 70% have at least one source of long-term debt, 34% have two or more sources of outstanding long-term debt, 25% have overdrawn their checking account in the past 12 months, 23% with retirement accounts have taken a hardship withdrawal in the past 12 months