Millennials and money: Financial preparedness and money management practices before COVID-19

August 2020

Precarious financial behaviors, coupled with low financial literacy, have left many millennials ill-equipped to face a severe economic crisis.

 
 
 
 
 
 
 
Summary

In 2018, when the economy was expanding and the economic collapse due to the coronavirus pandemic was still a long way off, most millennials were already stressed about and struggling with their personal finances. This report sheds light on the factors contributing to millennials’ financial fragility, with an eye toward helping them prepare for current and future economic challenges.

 
 
 
 
 
 
 
 
Key Insights
Only 19 percent of millennials who perceived themselves as having high knowledge about personal finance correctly answered basic questions assessing fundamental financial concepts.
In 2018, 63% of millennials felt anxious about their financial situation and more than half lacked an emergency fund to cover three months’ expenses.
Millennials carry large volumes of mortgage and student loan debt, and 44% feel they have too much debt.
43% of millennials report using some form of alternative financial services (such as payday loans and pawn shops).
Thirty-seven percent of millennials are financially fragile (defined as not being able, or likely not being able, to come up with $2,000 in 30 days).
Methodology

The report’s findings are based on data from the National Financial Capability Study (NFCS), a triennial survey that provides a baseline measure of American adults’ financial capability. The NFCS is nationally representative and includes more than 27,000 observations, allowing for rigorous analysis of population subgroups such as millennials (defined here as adults age 18–37).

 
 
 
 
 
 
 
 
The current crisis has made the value of financial resilience abundantly clear.
Download Report Materials
Authors

About TIAA Institute

The TIAA Institute helps advance the ways individuals and institutions plan for financial security and organizational effectiveness. The Institute conducts in depth research, provides access to a network of thought leaders, and enables those it serves to anticipate trends, plan future strategies and maximize opportunities for success.
Related Publications

Related Publications

Zoomed-in rendering

Employment volatility in the academic workforce: Implications for faculty financial and retirement plans

June 2021

Short-term appointments in the academic workforce account for roughly two thirds of all faculty positions. Yet little is known about this segment’s financial needs, experiences and professional stability.

Figure 2

Benchmarks for efficiency and sustainability: A research study on the cost of delivery

May 2021

With rising tuition costs under scrutiny, colleges are minimizing annual tuition increases while boosting financial aid packages, straining an already fragile business model.

RPA

Aligning financial sustainability with student access and success: Opportunities for private colleges

May 2021

America’s private nonprofit colleges and universities are facing serious financial and demographic challenges. How they respond can affect students for years to come.