Millennial Financial Literacy and Fin-tech Use

Who Knows What in the Digital Era


Millennials comprise 35% of the U.S. labor force and by 2019 are expected to surpass Baby Boomers as the nation’s largest generation. So their financial capability matters greatly to the U.S. economy.


The Millennial generation’s transformative impact arises not only from its sheer size, currently topping 71 million U.S. residents, but also from Millennials’ willingness to integrate mobile technology into everyday activities, including banking, purchasing, and comparison shopping. This report, based on the 2018 wave of the TIAA Institute-GFLEC Personal Finance Index (P-Fin Index), examines Millennials’ financial literacy and the state of their personal finances. The authors address Millennials’ financial knowledge relative to the general population, variations among subgroups, and areas of strength and weakness. They also explore this generation’s use of smartphones and other mobile technologies for financial purposes, commonly referred to as “fin-tech.”  

Key Insights

•    Millennials, on average, answered correctly only 44% of the P-Fin Index questions, compared with 50% among all U.S. adults. 

•    Older Millennials answered 47% of questions correctly, faring better than younger Millennials who answered only 41% correctly. 

•    More than 90% of Millennials own a smartphone, and among this group 80% use their phone to execute financial transactions and 90% to gather financial information.

•    Smartphone usage for making payments and tracking expenses is not linked to better financial management.

Explore Report Content

Executive summary

Using an oversample of Gen Y in the 2018 wave of the TIAA Institute-GFLEC Personal Finance Index (P-Fin Index), this report examines the financial literacy of millennials and how they engage with fin-tech, i.e., use smartphones for financial purposes.

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The transformative impact of Generation Y (Gen Y), also known as the “millennial” generation, on the U.S. economy is well underway—an inevitability given Gen Y’s sheer size.1 There were more than 71 million millennials in 2016, a figure projected to reach 73 million in 2019, at which point they will surpass baby boomers as the largest generation in the U.S.2 In fact, Gen Y already comprises the largest share of the U.S. labor force at 35% (56 million individuals).

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Millennial financial literacy (or lack thereof)

Many Americans lack personal finance knowledge that enables sound financial decision making, but this reality is more pronounced among Gen Y. Millennials answered 44% of the P-Fin Index questions correctly, on average, compared with 50% among all U.S. adults (Figure 1).

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Millennial P-Fin Figure 1

Financial knowledge across functional areas

The P-Fin Index gauges personal finance knowledge and understanding in eight functional areas:
1. Earning—determinants of wages and take-home pay.
2. Consuming—budgets and managing spending.
3. Saving—factors that maximize accumulations.
4. Investing—investment types, risk and return.
5. Borrowing/managing debt—relationship between loan features and repayments. 
6. Insuring—types of coverage and how insurance works.
7. Comprehending risk—understanding uncertain financial outcomes.
8. Go-to information sources—recognizing appropriate sources and advice.

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Millennial P-Fin Figure 3

Millennial fin-tech use

Given the availability of fin-tech that has fundamentally changed how individuals can conduct and manage personal finances, the 2018 P-Fin Index survey included questions to gauge smartphone use for a number of transactional and informational financial activities. These questions also enable examining how fin-tech use relates to financial literacy and personal finance outcomes.

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Millennial P-Fin Figure 4

Fin-tech and personal finance outcomes

One might view fin-tech as a tool that provides convenience, but one that also has the potential to improve personal finance decisions and behavior. It could then promote better personal finance outcomes. But the dynamic is more complex and nuanced, especially when viewed at the level of separate fin-tech activities. One could readily develop a narrative where some fin-tech activities result in poorer financial outcomes, at least for some individuals. For example, consider the ability to make mobile payments at the point of purchase. This convenience creates another degree of separation from handing over cash (now an individual does not even need to open a wallet to remove a debit or credit card), and in doing so it could increase the likelihood that some individuals overspend.

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Millennial P-Fin Figure 9


Financial literacy positions one to make appropriate decisions and experience better financial outcomes. Research confirms this dynamic. Unfortunately, millennials in general, and younger millennials in particular, are operating from a limited base of financial knowledge. Nonetheless, these individuals must make numerous financial decisions on an ongoing basis. Some decisions are relatively trivial in the moment, but have a cumulative effect over time. Other decisions have self-evident importance for financial well-being now and even decades into the future.

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