By Sydney Barrilleaux
Generational divide: Millennials reported lower financial well-being compared to Gen Xers and boomers
Generations are already seen as unique in terms of values and beliefs. These differences may stretch into the realm of finance, according to a new study from the University of Georgia.
Researchers looked at data from the 2016 Consumer Financial Protection Bureau’s National Financial Well-Being Survey. It focused on the financial knowledge, skills and behaviors of three generations: baby boomers, Generation X and millennials (gen Y).
“We focused on the differences in the relationships between financial knowledge, skill, and behavior and financial well-being of these three generations. This is to give us a broader understanding of how people learn things and use their knowledge and skills differently by generation,” said Lu Fan, lead author and associate professor for UGA’s College of Family and Consumer Sciences. “They have different life goals and priorities at different ages.”
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Based on responses to the survey:
- Millennials showed lower levels of financial well-being, money mangement skills and knowledge.
- Millennials could benefit more from increasing their objective financial knowledge compared to boomers.
- Boomers had the highest levels of financial well-being, money mangement skills and knowledge.
- Boomers could improve financial well-being from better money management behavior and goal commitment.
- Financial knowledge and money management skills tended to increase with age.
- Gen Xers felt sticking to long-term financial goals was especially crucial as they need to plan their spending leading up to and during retirement.
Fan said that certain factors are more impactful to a generation’s financial well-being than others. Because of these varying relationships, the study found it may be best for financial advisors and educators to tailor their programs for different generations.
“Millennials are faced with various mid-life financial choices and long-term planning decisions, and therefore need to improve their financial knowledge, skills and behaviors in order to reach better financial well-being,” Fan said. “Most boomers are now in retirement, so it’s important to understand their financial needs and management behaviors during this life stage.”
The study was published in the International Journal of Consumer Studies and co-authored by Robin Henager. Contact Lu Fan, lufan@uga.edu
The full release is available online at https://t.uga.edu/generationaldivide
