Two Surveys Reveal Financial Literacy, Behaviors of Millennials and Gen Z
Posted By Terri Williams on July 18, 2017 at 1:39 pm
Millennials and Generation Z are the country’s youngest consumers. And, two new surveys provide insight into their financial behaviors and opinions, as well as their levels of financial literacy.
According to the GenFKD Millennial Money Survey:
- 69 percent would buy more stocks and bonds if they had more money.
- 94 percent would like to own a house in the future.
- 76 percent say they would rather live in suburbs compared to cities.
- 55 percent have $10,000 or more in student debt.
The survey respondents also had some strong feelings about public policy:
- 44 percent feel the government stifles small business.
- 83 percent want government to promote entrepreneurship.
- 59 percent feel health insurance should not be required.
Millennials are still reeling from the effects of the Great Recession. While one famous millionaire speculated that $19 avocados are the real reason millennials struggle financially, stagnant wages, limited job opportunities, and student loan debt are undoubtedly contributing factors. In fact, one study reveals that student loan debt is limiting careers, marriage, home-buying, and retirement plans.
Nearly two-thirds of respondents want to pursue entrepreneurship options, which may shape their feelings about the government’s role in small businesses. Regarding the millennial healthcare perspective, a report by Becker’s Hospital Review reveals that most millennials don’t schedule preventive visits to their physician – and half don’t even see a physician once a year. Also, they’re more likely than other generations to think that healthcare is too expensive, and more likely to ask for a less expensive healthcare option, request a discount, or petition for a review of an insurance decision.
The second survey, “Generation Z’s Financial Report Card,” by TransUnion, is a study that reveals the following about young people and financial literacy:
- 61% of teens ages 13-17 give themselves an A or B when grading how well they successfully manage their money.
- 83% are currently saving money.
- 73% of teens consider the cost of an item before making a purchase.
- 58% of teens consider whether or not they have enough money saved before making a purchase.
Regarding factors that affect credit scores:
- 80% understand that paying bills on time has a positive effect.
- 20% believe checking your credit score increases it, 22% believe it decreases your score, and 20% aren’t sure.
- 33% believe cosigning for a loan increases your credit score, and 26% aren’t sure.
According to Heather Battison, vice president of TransUnion, “The study shows teens ages 13-17 are proactive in honing financial expertise and are gaining experience with credit cards at an early age.” She says 20 percent of respondents are authorized users on credit cards. “Every generation is different, but the bottom line is that it’s crucial for parents to talk to their teens about money in order to start a good foundation for financial literacy at an early age,” Battison tells GoodCall®.
While Generation Z appears to be knowledgeable regarding the basics of money management, Battison is concerned that they don’t understand the basics of credit. “For example, when asked if things like income or cell phone payments impacted their score, 56 percent and 46 percent, respectively, thought these were taken into consideration, but the reality is they are not factored into a credit score.”
Battison says it’s not uncommon to encounter consumers who have low credit scores because of mistakes they made when they were younger. “This underscores the importance of helping teens understand credit, so they’re prepared to make sound financial decisions when they’re old enough to have access to credit.”
Keys to increasing financial literacy
TransUnion’s survey also reveals that most teens (84%) learn about money from their parents, so Battison recommends implementing the following tips:
- Teach them how to budget as soon as they start receiving an allowance. This will help them better understand the importance of spending less than what they earn before they are old enough to have access to a credit card.
- Promote the significance of saving money to help them comprehend the need for preparing for unexpected expenses. Once they’re older and become credit card users, they’ll realize that missing payments on their bills or unanticipated expenses will negatively affect their credit score.
- Walk them through your own credit report once they become credit active, to help them better understand credit basics. By discussing each section of the report, even if it’s high level, they will get familiar with the type of information and accounts that are taken into consideration when it comes to credit.
- Explain the importance of practicing responsible credit habits like paying bills on time and maintaining a low credit utilization by using a small portion of their available credit. Also, let your teen know that building credit doesn’t happen overnight; therefore, starting the process early on by demonstrating the ability to make on-time payments is crucial.
Jake Serfas, lead financial strategist at wealth management firm O’Dell, Winkfield, Roseman and Shipp in Washington D.C., believes that developing financial literacy is one of the most important skills that members of any generation can learn. “When it comes to business, finance and money, it’s an intellectual sport where only the strongest and smartest survive and thrive,” Serfas tells GoodCall®. “Basic financial literacy is one of the greatest assets someone can have and the more they can build on that, the better off they will be.”
So, why is financial literacy so important? Serfas explains, “If you don’t know how to protect your money, how to get a better rate of return, how to generate a paycheck in retirement from your assets, how to be more tax efficient both now and in the future, you could be making mistakes that can cost you tens-of-thousands if not hundreds-of-thousands of dollars over your lifetime.”