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Understanding and Remedying Millennials’ Financial Distress


Annamaria Lusardi

Professor and Academic Director, Global Financial Literacy Excellence Center, The George Washington University School of Business


Andrea Hasler

Assistant Research Professor, Financial Literacy, Global Financial Literacy Excellence Center, The George Washington University School of Business

Millennials face increasing debt and instability with decreasing financial literacy. How can we help change their financial distress to financial success?

Making financial decisions can be stressful, in particular when people think they have little or no control over their finances.

Emerging from the 2018 wave of the National Financial Capability Study (NFCS), a whopping percentage 65 percent of millennials — defined here as those ages 23-37 — reported that thinking about my personal finances can make me feel anxious. And beyond that, as many as 54 percent of millennials agreed that discussing my finances can make my heart race or make me feel stressed.

Now we’re stressed out

Indicators of financial well-being in the NFCS confirm that millennials are in financial distress. In fact, roughly 45 percent stated that they are just “getting by” financially, a much higher proportion than the general population, of which 36 percent answered similarly. And sadly, 42 percent of these young people stated that their finances control their life.

Where to turn

The situation is dire not only because millennials have to make complex financial decisions, including managing student loans and 401(k) accounts, but also because they have to do so with little or no financial knowledge. When asked three simple questions assessing knowledge of interest compounding, inflation, and risk diversification, only 16 percent of millennials displayed familiarity with these basic concepts. Financial knowledge is both important and consequential; those who have this basic knowledge are not only able to manage their personal finance better but also display fewer signs of financial distress.

Finances for the future

These numbers are call to action. There are at least three initiatives that can be taken to make sure that millennials become better equipped to deal with their personal finances:

  1. Teach personal finance in school: So that young people can familiarize themselves with money management as soon as possible.
  2. We need financial wellness programs in the workplace: Financial stress can take a toll on the health and productivity of workers.
  3. Let’s use technology: Millennials are a tech-savvy generation, and technology provides many tools to help people make good financial decisions via, for instance, financial literacy games and easy planning and budgeting apps. Plus, why not have fun while learning?

One thing is clear: we need to take the stress out of personal finances and better equip the millennial generation with tools for financial stability before it’s too late.

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