How Millennials Are Advancing Financial Literacy
October 22, 2018 by Stephanie Bell-Rose and Annamaria Lusardi
Millennials use of digital technology has transformed the way they socialize and form communities. Their interest in streaming services has upended the entertainment industry. Their preference for online shopping has forced businesses to revolutionize the models they have relied on for decades.
We’ve all seen the headlines. Over 90% of millennials have a smartphone and half say they are mostly or almost always online and connected. It is no surprise that the generation that has grown up with technology have become reliant on it for almost every aspect of their lives. When it comes to personal finance, the behavior of this increasingly influential demographic is no different. The TIAA Institute and the Global Financial Literacy Excellence Center (GFLEC) at the George Washington University School of Business came together to produce Millennial Financial Literacy: Findings from the 2018 TIAA Institute-GFLEC Personal Finance (P-Fin) Index, which examines not only the personal finance knowledge of millennials but also how that knowledge intersects with the use of financial technology.
Transforming Personal Finance
The results remind us how much has changed when it comes to personal finance. Eighty-two percent of millennials use their smartphone to comparison shop, 68% to pay bills, 67% to track spending, and 58% to deposit checks. That’s over half of a generation who may never visit a brick and mortar bank.
However, all of this technology, the banking websites and apps like Mint and Venmo that we use to make our lives easier, don’t compensate for a lack of financial literacy. Our second annual Personal Finance (P-Fin) Index revealed that on average, U.S. adults of all generations answered only half of the P-Fin index questions correctly – covering earning, consuming, saving, insuring, and recognizing appropriate information resources and advice. These topic areas affect everything from the ability to pay bills on time, to one’s credit score, to being able to retire with enough money to live comfortably.
Millennials use of digital technology has transformed the way they socialize and form communities. Their interest in streaming services has upended the entertainment industry. Their preference for online shopping has forced businesses to revolutionize the models they have relied on for decades.
We’ve all seen the headlines. Over 90% of millennials have a smartphone and half say they are mostly or almost always online and connected. It is no surprise that the generation that has grown up with technology have become reliant on it for almost every aspect of their lives. When it comes to personal finance, the behavior of this increasingly influential demographic is no different. The TIAA Institute and the Global Financial Literacy Excellence Center (GFLEC) at the George Washington University School of Business came together to produce Millennial Financial Literacy: Findings from the 2018 TIAA Institute-GFLEC Personal Finance (P-Fin) Index, which examines not only the personal finance knowledge of millennials but also how that knowledge intersects with the use of financial technology.
Transforming Personal Finance
The results remind us how much has changed when it comes to personal finance. Eighty-two percent of millennials use their smartphone to comparison shop, 68% to pay bills, 67% to track spending, and 58% to deposit checks. That’s over half of a generation who may never visit a brick and mortar bank.
However, all of this technology, the banking websites and apps like Mint and Venmo that we use to make our lives easier, don’t compensate for a lack of financial literacy. Our second annual Personal Finance (P-Fin) Index revealed that on average, U.S. adults of all generations answered only half of the P-Fin index questions correctly – covering earning, consuming, saving, insuring, and recognizing appropriate information resources and advice. These topic areas affect everything from the ability to pay bills on time, to one’s credit score, to being able to retire with enough money to live comfortably.
Stephanie Bell-Rose is a Senior Managing Director of TIAA and Head of the TIAA Institute.
Annamaria Lusardi is the Denit Trust Chair of Economics & Accountancy; Academic Director, at the Global Financial Literacy Excellence Center (GFLEC).
