For generations, young adults entering the "real world" have been confronted with the sudden reality of having to pay bills, find a job and potentially make one of the biggest purchases of their lives, be it a car or a home. But now, with the amount of student loan debt reaching record levels, the financial pressures on our nation's youth are greater than ever.
To handle these pressures, millennials need to be financially savvy. Year after year in the United States, we have celebrated Financial Literacy Month in April. Yet it seems that we still lack a sufficient understanding of young people's experiences with and attitudes towards financial literacy.
It is time for that to change. According to TD Bank's recent Financial Education Survey, 76 percent of millennials are seeking some type of financial advice, whether that be on basic information, such as savings accounts and checking accounts, to more complicated items, like mortgages or starting a small business.
To gain a deeper understanding of the sources that these young adults turn to for financial information and advice, as well as their banking behaviors and preferences, TD Bank polled more than 2,000 millennials ages 18-34. The results shed light on the types of financial issues, programs and resources that should be advanced in order to substantially increase financial literacy levels among young people.
Family as Financial Educators
According to the survey, family members are a significant influence in millennials' financial decisions, with 49 percent saying their parents shape their banking and financial views, and 40 percent of them also turning to their familes for advice on basic money matters.
It is wonderful that millennials can turn to those closest to them when they need help, but the support should not stop there. Parents and guardians should feel empowered to start financial conversations early and be transparent about how money works. Unfortunately, many parents may not have the financial savvy to help their young adult children with their personal finance questions. Banks and other financial institutions should provide the guidance families need to feel confident and knowledgeable in this space.
Stores and Online: Banking of the Future
Banks are not just about transactions anymore. In fact, 54 percent of millennials reported going to their bank for financial information and advice. Bank professionals can help young people better understand when it's time to transition from a student checking account, the pros and cons of owning a home versus renting an apartment, and how to start saving for a long-term goal, like a dream vacation.
Mobile and online banking is also increasing in importance for millennials. Our survey found 90 percent of young adults are doing their banking online or on their mobile device. Most often, when banking on their mobile device, millennials are paying bills, transferring money between checking and saving accounts or just checking their account balances. For millennials, financial education can guide the transition from asking friends and family for advice, to open and transparent conversations with their bankers, to better utilizing mobile bank technologies in this rapidly changing landscape.
Skipping Out on Personal Finance 101
Given that some schools in the U.S. don't have the resources to provide financial literacy classes, many people enter adulthood without understanding the basics of personal finance. Our survey found that only 31 percent of millennials have had formal financial education training and a staggering 69 percent received no financial literacy lessons at all.
We should encourage teens and 20-somethings to invest the time to take personal finance classes, whether that's through seminars at a bank or online courses. Increased school funding to create this kind of curriculum could be instrumental in addressing this gap. But this is a longer-term solution. With many free resources already out there, young people can take greater charge of their own financial destinies by finding the right book, course, mobile app or resource for them. Banks should make it easy for millennials to attend seminars; they should provide simple yet useful tips and tools on their website or work with schools to offer free financial education programs.
Increased financial education is a key to supporting the success of both individuals and our society as a whole. Parents and guardians can be influential in increasing the financial literacy levels of young Americans, just as financial institutions themselves can and should be further leveraged. But ultimately, millennials themselves must take the initiative to self-educate. If we all work together -- and start right now -- we can help create financial savvy and confident young consumers.