Getting the Conversation Started with Millennials

Written By: Jacquie Carroll, Ed.D, AFC

Introduction

April was Financial Literacy Month, and this year again the events over the last few years have generated not only a national discussion but also many community and generational discussions about the importance and impact of financial literacy, personal finance, and financial responsibility. For example, Millennials (ages 23-37) as a generation are on the cusp of major milestone moments such as completing college, getting married, buying a home, or entering their peak earning years, but all prior generations believe that the Millennial generation has it harder than the generations before them. When compared to all other generations, Millennials are likely to have more immediate financial needs, less ability to save for retirement, and are much less able to deal with unexpected expenses. Although Millennials are better educated than prior generations, they often have lower incomes and are most likely to feel overwhelmed when reviewing their financial situations. Their top priority is being able to afford everyday bills and depending on their level of financial fragility. Many live paycheck to paycheck or plan for short periods of time. From a financial behavior perspective, 61% of Millennials self-report sticking to a budget, and 42% note adding to a monthly savings plan. Additionally, two out of five Millennials are focused on getting debt under control—primarily focusing on student loans and credit card debt. Another common characteristic is that Millennials tend to be single and are less likely to own a home, although many are part of blended families. 

Summary of Findings

1. Financial well-being is lower among Millennials than the older working-age population, but it can vary widely, by retirement plan ownership, student loan debt level, and financial experience. 
2. Within the Millennial population, women, in particular, those without a college degree, those who are single, and those who are unemployed, display especially low levels of financial well-being. 
3. Lastly, financial literacy is correlated with financial well-being.

Key Points, impacts, or insights

Since there can be significant subgroups, programs and client services that aim to improve financial well-being could be more effective if they include the following elements: personalized assessment of the financial situation to understand needs and comprehensive content to help address those needs and to improve financial knowledge and skills. Remember it is all about real-life application—tailored to their needs. 

• Once individuals have basic financial knowledge, the next step is to connect those financial concepts, skills, and knowledge to their ongoing personal and family resources. 
• Individuals pay attention when their world changes—so a teachable moment via important milestones is a great opportunity.   
• If there is no immediate connection, the information does not seem to stick, and it will not result in potential or desired behavior changes.

The realism noted early makes Millennials a cautious group which is evident as they exhibit some positive personal financial behaviors such as paying down debt, dedication to savings, and monitoring their credit card debt. What Millennials need and want are clear roadmaps, and they need partners to turn to for financial guidance; they want to do more with their money, but they do not know where to start. What it really comes down to is that this generation is looking for significance, experience, change, dependence, and service—in all areas of their lives. Many Millennials have no one to trust for financial guidance, and as a group rely heavily on robo-advisors and algorithms. As such, college-attending individuals and fresh college graduates could become an important part of building a financial advisor’s client base. 

What they need are good leaders and listeners to help provide mentoring experiences and ladders that connect them to the necessary tools and resources. Engage Millennials in an honest discussion about finances, including topics of spending, saving, protecting, and investing their resources, in an effort to achieve financial success. Typically, most people tend to equate financial success with wealth and only realize later on in life that this is not necessarily the case. Financial success should be defined as achieving one’s financial goals, and this is where individuals move from knowledge and understanding to action and behavior change. Keep the following dos and don’ts in mind as you are working with Millennials:

How to get the conversation started….

There seems to be no better time to help Millennials build and take the first step on the road to financial well-being. To what extent are you serving Millennials, and what are the most essential products and services you like to connect them with to help build a good personal financial framework foundation?

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