Abstract
This study investigates the role of financial knowledge in various short-term and long-term financial behaviors among Millennials in the United States. Results from the 2015 National Financial Capability Study (NFCS) indicate that Millennials have lower levels of objective financial knowledge and similar levels of perceived financial knowledge as compared to all households. Consistent multivariate results find financial knowledge to be positively associated with performing positive short-term and long-term financial behaviors. Results are found to be robust across different measurements of financial knowledge and behavior, and the issue of the potential for reverse causality is specifically addressed. This study provides a comprehensive financial profile of Millennials with important insight for policymakers as well as financial practitioners.
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Notes
With respect to financial knowledge variables, we dropped cases where the respondent chose “prefer not to say” as the answer to the objective financial knowledge questions and financial behavior questions and where the respondent answered, “prefer not to say” or “don’t know” to the perceived financial knowledge question. All other “prefer not to say” responses to the control variables were also excluded.
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Appendix: Sample Characteristics in the 2015 NFCS
Appendix: Sample Characteristics in the 2015 NFCS
Variables | Millennials (N = 6784) | All households (N = 23,369) |
|---|---|---|
Mean (median) age | 26.1 (26.0) | 46.2 (47.0) |
Gender | ||
Male | 48.88 | 49.44 |
Female | 51.12 | 50.56 |
Race | ||
White | 50.46 | 65.47 |
Black | 13.85 | 11.71 |
Hispanic | 25.01 | 15.21 |
Asian/others | 10.67 | 7.62 |
Marital status | ||
Married | 35.48 | 52.78 |
Single | 61.84 | 31.13 |
Separated/divorce/widow | 2.68 | 16.09 |
Dependent children | 39.64 | 36.79 |
Employed | ||
Full-time worker | 43.31 | 38.54 |
Self-employed | 6.07 | 7.04 |
Part-time worker | 14.54 | 9.84 |
Homemaker | 9.36 | 8.41 |
Student | 16.10 | 5.37 |
Disabled | 1.47 | 4.49 |
Unemployed | 9.15 | 26.32 |
Education | ||
Less than high school | 2.85 | 2.39 |
High school degree | 28.50 | 26.08 |
Some college | 42.60 | 43.24 |
Bachelor degree | 17.57 | 17.37 |
Post-bachelor degree | 8.48 | 10.93 |
Household income | ||
Less than $15,000 | 18.80 | 12.16 |
At least $15,000 but less than $25,000 | 13.78 | 11.41 |
At least $25,000 but less than $35,000 | 14.13 | 11.06 |
At least $35,000 but less than $50,000 | 15.31 | 14.92 |
At least $50,000 but less than $75,000 | 19.10 | 20.22 |
At least $75,000 but less than $100,000 | 9.93 | 12.97 |
At least $100,000 but less than $150,000 | 6.53 | 11.74 |
$150,000 or more | 2.42 | 5.51 |
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Kim, K.T., Anderson, S.G. & Seay, M.C. Financial Knowledge and Short-Term and Long-Term Financial Behaviors of Millennials in the United States. J Fam Econ Iss 40, 194–208 (2019). https://doi.org/10.1007/s10834-018-9595-2
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DOI: https://doi.org/10.1007/s10834-018-9595-2