A New Study Reveals 3 Basic Financial Questions Most Millennials Can’t Answer
Millenials. They’re doing a great job about being assertive about what they expect in the workplace. But dealing with their finances? Not so much. Blame the ease of online banking or the fact that we grew up in the midst of the Great Recession, but one thing is for sure: money is not typically our forte. San Diego State University recently conducted a study of young Americans to assess just how financially literate this generation is. The University surveyed 2,712 20-somethings and asked each of them these three questions:
1. Do you think that the following statement is true or false? Buying a single company stock usually provides a safer return than a stock mutual fund.
2. Suppose you had $100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow: More than $102, exactly $102, or less than $102?
3. Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After one year, would you be able to buy more than, exactly the same as, or less than today with the money in this account?
The average respondent could answer only 1.8 correctly, and only a quarter got all three right. (Find the answers at the very bottom of this post). While this news is a little bit shocking, it’s not a total surprise. Another recent study revealed that almost a quarter of millennials don’t even have a savings account.
SDSU’s study also mentions that the millennials they surveyed expressed responsibility in just one of the following three categories: paying off debts on time, budgeting and living within one’s means and having any retirement savings at all. A mere 2% of those respondents showed responsible behavior in all three categories. Yikes. Millenials, allow us to introduce you to our favorite app, Mint. We think you might find it useful.
