A new study from the University of Georgia has found stark contrasts in the financial health values and beliefs of baby boomers, Generation X, and millennials. The research utilized data from the 2016 Consumer Financial Protection Bureau’s National Financial Well-Being Survey. According to the study, which reviewed the financial knowledge, skills, and behaviors of these generations, millennials face various mid-life financial choices and long-term planning decisions.
Therefore, improving their financial knowledge, skills, and behaviors is essential for better financial well-being. Lead author Lu Fan, an associate professor at UGA’s College of Family and Consumer Sciences, noted that “millennials are particularly in need of financial education to reach better financial well-being.”
The study revealed that older consumers in the United States generally have higher financial well-being compared to younger ones. However, the concept of financial well-being and freedom varies between generations.
Key findings:
– Millennials showed lower levels of financial well-being, money management skills, and knowledge. They could benefit significantly from increasing their objective financial knowledge.
Generational financial well-being contrasts
– Baby boomers exhibited the highest levels of financial well-being, money management skills, and knowledge. They could further enhance their financial health by better money management behavior and goal commitment. – Financial knowledge and money management skills generally increased with age.
– Generation X emphasized the importance of sticking to long-term financial goals, especially in planning their spending for retirement. “We focused on the differences in the relationships between financial knowledge, skill, and behavior and financial well-being of these three generations to gain a broader understanding of how people learn and use their knowledge and skills differently by generation,” said Fan. “They have different life goals and priorities at different ages.”
The study suggests that financial advisors and educators might achieve better results by customizing programs to cater to each generation’s specific needs.
The ability to set and follow through on long-term financial goals was associated with increased financial health across all ages. However, each generation has particular areas for improvement: millennials need better financial knowledge, baby boomers could benefit from enhanced money management behaviors, and Gen Xers should continue focusing on long-term financial goals. “Most boomers are now in retirement, so it’s crucial to understand their financial needs and management behaviors during this life stage,” added Fan.
Image Credits: Photo by Fabian Wiktor on Unsplash
