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Archive | February, 2017

Millennials Show Alarming Gap Between Financial Confidence and Knowledge

Millennials Show Alarming Gap Between Financial Confidence and Knowledge

Millennials are overconfident and under-prepared when it comes to managing their money, according to new research funded by the National Endowment for Financial Education® (NEFE®) and conducted by George Washington University. They consider themselves far more knowledgeable financially than they actually are.

“Millennials are known for having unrelenting belief in their own abilities. This generation is diverse and highly educated. However, their overconfidence puts them in an extremely fragile financial position, and sadly, they don’t realize it,” says Ted Beck, president and CEO of NEFE.

Only 24 percent of respondents showed basic financial literacy in the study, with just 8 percent showing a high level of knowledge. Yet, 69 percent gave themselves a high self-assessment of financial knowledge.

“What young adults don’t know about money can hurt them,” says Beck. “This is our opportunity to reach them with relevant financial education to help close the gap.”

Financial Strengths: On paper, millennials are highly engaged in their financial lives. “It’s time to stop defining this generation solely by their student debt load. The picture is more nuanced,” says Beck.

The majority (88 percent) are banked, and 51 percent have a retirement account. Over 40 percent own their homes and one-fourth have investments in stocks, bonds or mutual funds.

Debt: However, on the other side of the balance sheet, millennials are heavily indebted and borrow against their assets. The majority (53 percent) feel they have too much debt. Two-thirds have at least one source of long-term debt (student loan, home mortgage, car loan), and 30 percent have more than one source of outstanding long-term debt. More than one-third have unpaid medical bills. About 20 percent of those with a self-directed retirement account either took a loan or made a hardship withdrawal in the prior 12 months.

“Young adults may not understand the consequences of their actions, such as how taking money out of their retirement accounts now has an exponentially negative effect on account balances in the future,” adds Beck.

Financial Satisfaction: Young adults also don’t feel good about their finances. Nearly one in five (18 percent) are “not at all satisfied” with their current personal financial condition; only 6 percent are “extremely satisfied.”

Financial Fragility: Many millennials are financially unprepared to handle sudden economic shocks. When asked if they could come up with $2,000 if an unexpected need arose within 30 days, nearly half (48 percent) said they probably or certainly could not come up with the funds. Less than one-third (32 percent) have set aside funds to cover three months of household expenses. Nearly 30 percent of those with bank accounts had overdrawn their account in the prior 12 months.

“The financial picture isn’t all bad,” says Beck. “But it’s not where it needs to be.”

For complete findings of the research, click here.

Study Details
This research analyzed data from the 2012 National Financial Capability Study (research brief of 2015 data also available), a state-by-state online survey commissioned by the FINRA Investor Education Foundation. The analysis focused on 23-35-year-olds, with a total of 5,525 observations. The study was led by Annamaria Lusardi, Ph.D., academic director of the Global Financial Literacy Excellence Center (GFLEC) and Denit Trust Chair of Economics and Accountancy at the George Washington University School of Business; and Carlo de Bassa Scheresberg, senior research associate at GFLEC.

 

Today’s Guest Article Comes From The National Endowment for Financial Education (NEFE)
NEFE is a nonprofit foundation that inspires empowered financial decision making for individuals and families through every stage of life. For more information, visit www.nefe.org.

 

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Top 9 Money-Saving Dorm Room Essentials

Top 9 Money-Saving Dorm Room Essentials

studentdormFour blank walls, small closets, communal bathrooms and a stranger sleeping in an identical bed three feet from you. Yep, your first dorm room can feel more like prison than an awesome college experience. That’s why it’s essential to transform your dorm room into a nurturing and organized living space where your mind can thrive. Here’s how to invest wisely in dorm room luxuries that will save you money in the long run.

1. Coffee Maker

Kick your brain into high gear with premium coffee made fresh from your dorm room at a fraction of the coffee shop price. Get a capsule espresso maker and automated milk frother that will automatically create delicious espresso and microfoam. This will save you massive amounts if it helps you forgo visits to the coffee shop.

2. Storage Furniture

Furniture that doubles as storage will help you stay organized and comfortable. Storage cubes from Ikea are great for corralling everything from textbooks to clothes to hair products. Knowing where all your stuff is will discourage you from wasting money on duplicate items, and it may even lower your stress level.

3. Clothesline

Air-drying your clothes will save you quarters at the laundromat and reduce wear and tear on your clothes over time, saving you money on replacements. Invest in a foldable clothes drying rack or a portable clothesline from The Container Store that doubles as a cool display for photos, cards or artwork.

4. Refrigerator

Having a mini-fridge is handy for saving leftovers from dinners out. Plus, you are more likely to keep staples like yogurt and milk on hand for quick breakfasts rather than splurging at the corner bakery on your way to class.

5. Rice Cooker

Beside making rice quickly and easily, a rice cooker can be used to make oatmeal, soup, steamed vegetables, and a ton of other things. At just $1-3 per serving for a filling and nutritious meal compared with $10 or more at Chipotle, a rice cooker will save you money on eating out. It can also be a great way to heat up leftovers, and can be stowed away in a closet when not in use.

6. Lapdesk

Extend the life of your laptop by keeping your laptop’s battery cool as you study. Rather than propping your laptop up on a pillow or blanket, stay comfy and cool with a lap desk. Check out Pottery Barn’s selection that includes an internal storage compartment starting at $59.

7. Printer

The long line at the library printer won’t be an impressive excuse to your composition instructor when you turn your paper in late. Avoid stress and save money on printing costs by buying a wireless color printer/scanner/copier like the Canon PIXMA MG3520 or HP Envy 4520.

8. Alarm Clock

Avoid the harmful blue light from your cell phone late at night and early in the morning by opting for an alarm clock that gently wakes you with a simulated sunrise like Philips Wake-Up Light. Research indicates that waking up naturally to sunlight increases alertness, cognitive performance, and reaction times, meaning you could earn better grades, scholarships or work promotions. Say goodbye to that second senior year!

9. Water Filter

Filling a reusable water bottle with water from your dorm room will save you from buying disposable water bottles from the vending machine. In fact, you could save a ton, since some estimates state that people spend 10,000 times more on bottled water than on tap water. For better tasting and cleaner water than regular tap water, opt for an attractive filter like the compact Soma Water Filter ($29) or a portable water purifier like the Sport Berkey ($29).

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