They might be better educated and more technologically savvy than previous generations, but that doesn’t mean millennials are making smart financial decisions.
Millennials are heavy users of the alternative financial system – which includes payday loans, pawnshops and tax refund advances – and reluctant to seek professional financial help.
That’s according to a recent report from tax and consulting firm PricewaterhouseCoopers and the George Washington University’s Global Financial Literacy Excellence Center. The report is based on survey results of more than 5,500 millennials (ages 23 to 35).
Cash-strapped, saddled with student loan debt and struggling to navigate a changing job market, millennials are risk-averse and wary of the stock market. That’s really no surprise, considering they came of age during the Great Recession.
When compared with other Americans, the millennial generation — those born between the early 1980s and mid-1990s — has the “lowest level of financial literacy,” the report said. Unfortunately, despite a lack of financial know-how, a mere 27 percent of millennials seek help from a financial professional.
A lack of financial literacy may explain why 42 percent of millennials took out a payday loan or auto title loan, used a pawnshop, got a tax refund advance or purchased a rent-to-own product in the past five years.