Millennials could be risking their financial future as they craft ways to tackle their student loans, car payments and credit card debt.
New research indicates that many are overusing credit cards, racking up fees with late payments or overdrawing checking accounts and, in some cases, even taking loans against 401(k) plans.
What’s worse: Millennials may have less wiggle room for financial mistakes. In many cases, Millennials could be earning about 20% less than their parents did when they were in the 25- to 34-year-old age range, according to a generational comparison by the nonprofit the Young Invincibles.
Millennials — defined for this study as those who are ages 23 to 35 — may be experiencing a disconnect with their money, according to new research funded by the National Endowment for Financial Education and conducted by George Washington University.
More than 70% have at least one long-term debt — be it a student loan, home mortgage, car loan. And 34% of Millennials are juggling two or more loans.
Yet many Millennials are taking on extra costs and risks as they juggle the bills. A quarter of those with checking accounts, for example, had overdrawn their account in the prior 12 months, according to the survey for the National Endowment for Financial Education.
About 23% of those with a self-directed retirement account either took a loan or made a hardship withdrawal from their 401(k) plan or other self-directed retirement account in the prior 12 months, according to the survey for the National Endowment for Financial Education.
Having confidence about dealing with your cash doesn’t equate to knowing the right moves to make when juggling debt or getting socked with an economic shock, such as a costly car repair or job loss.
