Millennial Financial Literacy and Fin-tech Use: Introduction
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. 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. In fact,
Gen Y already comprises the largest share of the U.S. labor force at 35% (56 million individuals).
Gen Y’s impact also comes from a willingness to integrate new technologies into everyday life. Over 90% of millennials own a smartphone, and 85% use social media. There are other uses for smartphones as well, such as financial. Depositing checks, transferring money, and comparison shopping are activities that can be executed via mobile technology. The use of smartphones and other mobile technologies for financial purposes, referred to as “fin-tech,” is now common among millennials.
The state of Gen Y personal finances matters greatly for the state of the economy as a whole. A more refined understanding of millennial financial literacy levels—their knowledge relative to the general population, variations among subgroups, and areas of strength and weakness—could accelerate initiatives to improve their financial well-being.
This report presents an examination of Gen Y financial literacy using the 2018 wave of the TIAA Institute-GFLEC Personal Finance Index (P-Fin Index). The P-Fin Index measures knowledge and understanding which enable sound financial decision making and effective management of personal finances. It is unique in its capacity to examine financial literacy across eight areas of personal finance in which individuals routinely function, in addition to providing a robust indicator of overall personal finance knowledge and understanding.
In addition, this report leverages a special set of questions in the 2018 survey to examine millennial fin-tech use across a range of activities and how fin-tech use relates to financial literacy and personal finance outcomes. These are important issues given recent research which found lower financial capability among mobile payment users.
The 2018 wave of the P-Fin Index survey was fielded online in January 2018 with a nationally representative sample of adults, ages 18 and older; millennials were oversampled during survey fielding, with 1,007 participating in the survey.