Millennials Chart a Path Toward Financial Awareness
On National Financial Awareness Day, a Charles Schwab survey delivers good news for millennials: despite student debt and rising costs, they are managing their money better than boomers or gen X.
1 National Financial Awareness Day
Tomorrow is National Financial Awareness Day! The purpose of this “holiday” is to help guide people toward more sound financial choices in their daily and long-term money management, something Billshark tries to do every day.
And here’s the good news, for millennials, at least. A recent national survey by the bank and brokerage firm Charles Schwab found that millennials are better at financial management than baby boomers or generation X.
2 The Challenges Millennials Face
This is despite—or perhaps because of—the unprecedented challenges faced by millennials, including outrageous student loan debt, soaring housing and child-care costs, stagnant salaries with fewer benefits, and the growing uncertainty of being able to attain stable, long-term employment. All this in an economy that still hasn’t fully recovered from the Great Recession, despite what the unemployment figures say.
Bloomberg earlier this year reported on an analysis of eight high-income countries by the think tank Resolution Foundation which found that millennials in their early 30s have average household incomes four percent lower than gen-Xers at the same age.
3 What the Schwab Survey Found
Nevertheless, the Schwab survey gave that cohort good marks for managing the money they do have. As reported by CNBC, Schwab assessed four main categories that it equated with sound financial practices: goal setting and financial planning; saving and investing; staying on track financially; and having confidence in reaching financial goals.
It found that millennials scored above average overall, with boomers posting an average score, and generation X rating slightly below average. Millennials were also found to be far more financially engaged, with more than half rebalancing their portfolios annually. They were also more likely to be aware of their brokerage account fees than their more senior counterparts.
4 Why Millennials Manage Money Better
Why is this? Necessity, perhaps. As mentioned above, there’s little in the way of a safety net for millennials when it comes to income security, and they’ve been forced to invent creative and flexible ways to adapt to the new normal. In addition, it’s possible that the Internet access their parents and grandparents didn’t have, with its ready access to vast stores of knowledge, affords them a more convenient way to learn about financial management. Because with few exceptions, sensible money management—or even such basic skills as how to balance your checkbook or create a budget—is something schools have never taught to any generation of Americans.
Also, older generations in general don’t seem to have had either the drive or the savvy to acquire wealth, whether “wealth” simply means being able to pay all your bills and live a comfortable lifestyle or whether it means accumulating huge sums of capital. Younger people these days, despite swimming upstream against a flood of financial challenges, appear more focused on money management than their elders did at the same age, and that’s a good thing.
“Wealth is often thought of as a lofty, unattainable number that doesn’t apply to most of us, but that’s an old-fashioned notion that needs to be retired. It doesn’t matter whether you have a lot or a little—what matters is that you think about the money you have as your wealth, and that you pay attention to it. Being engaged is the only way to reach your personal goals.” — Terri Kallsen, EVP and head of Schwab Investor Services
5 Making Money Management a Priority
If you didn’t receive a solid foundation from your parents in how to earn, spend, and save money, you had to learn on your own, either from various books or courses, or through trial and error. Maybe you’ve spent a fortune on get-rich-quick books and eventually learned there are no shortcuts to wealth. Maybe you were lucky enough to find a spouse who exposed you to sound financial concepts. Maybe you’ve even been learning about money management from Billshark’s blogs.
However you’re becoming financially aware, it’s important for your future financial security as well as your peace of mind that you make sound money management a priority in your life. Billshark is here to help you maintain that sensible practice.
