Millennials reported lower financial well-being compared to Gen Xers and boomers<\/p>\n
Generations are already seen as unique<\/strong> in terms of values and beliefs. These differences may stretch into the realm of finance, according to a new study<\/a> from the University of Georgia.<\/p>\n Financial well-being reflects a person\u2019s ability to hold out against financial troubles and achieve their goals. If financial well-being is low, there can be negative impacts<\/a> on a person\u2019s mental health.<\/p>\n The researchers looked at data from the 2016 Consumer Financial Protection Bureau\u2019s National Financial Well-Being Survey. It focused on the financial knowledge, skills and behaviors of three generations: baby boomers, Generation X and millennials.<\/p>\n \u201cWe 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,\u201d said Lu Fan<\/a>, lead author and associate professor for UGA\u2019s College of Family and Consumer Sciences<\/a>. \u201cThey have different life goals and priorities at different ages.\u201d<\/p>\n Based on responses to the survey, millennials showed lower levels of financial well-being and knowledge while boomers had the highest. Financial knowledge and money management skills also tended to increase with age.<\/p>\n Insights from this study could help in developing programs to improve financial well-being across generations.<\/p>\n Lived experience may play a role in financial well-being<\/p>\n The researchers looked at a variety of factors to assess financial well-being, including personal financial knowledge. This includes both subjective knowledge, what someone believes they know, and objective knowledge, what they actually know.<\/p>\n Financial skills, day-to-day money management, commitment to financial goals and saving regularly are also key. Even so, millennials often showed less financial knowledge and money management skills, which may be damaging their overall financial well-being.<\/p>\n \u201cMillennials reported lower knowledge mostly because they\u2019re younger, and they\u2019re still learning,\u201d Fan said. \u201cBoomers reported higher financial knowledge, probably because they\u2019ve learned through their life and through their experiences.\u201d<\/p>\n These experiences can vary; not only could boomers be learning from their daily lives but also major national or world events that can shape the values of an entire generation.<\/p>\n Programs could help improve financial well-being for each generation<\/p>\n Even with this overlap, however, Fan said that certain factors are more impactful to a generation\u2019s financial well-being than others. Millennials could benefit more from increasing their objective financial knowledge compared to boomers, while boomers could improve financial well-being from better money management behavior and goal commitment.<\/p>\n Being able to set and follow through with long-term financial goals was also tied to increased financial well-being. Sticking to goals was important for all generations, but especially crucial for Gen Xers, as they need to plan their spending leading up to and during retirement.<\/p>\n Because of these varying relationships, the study found it may be best for financial advisors and educators to tailor their programs for different generations.<\/p>\n \u201cMillennials 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,\u201d Fan said. \u201cMost boomers are now in retirement, so it\u2019s important to understand their financial needs and management behaviors during this life stage.\u201d<\/p>\n