College-Educated Millennials: An Overview of Their Personal Finances
This study has used new data from the NFCS to analyze salient issues related to college-educated Millennials’ financial capability, practices and status, and in the process identify key financial challenges they face. The study examines perceived versus demonstrated readiness to manage personal finances and builds an innovative and comprehensive financial profile of college-educated members of Gen Y. As demonstrated by the analysis, despite encouraging findings in terms of asset ownership, college-educated Millennials are burdened by debt and struggle to meet payments on short- and long-term obligations. They turn to expensive credit card practices and alternative financial services to help make ends meet, and they lack a financial reserve to help meet the expenses of an unexpected negative event. Furthermore, underlying Gen Y financial decision making is a generally low level of financial literacy, which is not surprising given that most have not received any form of financial education. The results suggest that the promotion of financial literacy—through financial education—is needed. In particular, there is a need for improved knowledge and understanding regarding debt and debt management. Policies aimed at improving financial literacy could help Gen Y minimize the costs incurred in managing debt, improve personal financial safety nets, and fortify both short-term and long-term financial stability and security. The gap between the financial responsibilities of Gen Y and their ability to manage financial decisions and take advantage of financial opportunities has both individual and societal implications if it remains unaddressed.