Millennials Are Overconfident With Money: Is It True?


Millennials (born between 1980-2000) are always a topic of discussion, especially when it comes to money management. Some people claim they are overconfident with money, while some claim they lack necessary financial knowledge.

What are they exactly doing with their money?

Well, this kind of topic automatically needs a comparison between the two generations so we can learn more.

In this article, we will compare millennials with baby boomers because both the generations have faced the economic downturn. It is better to come up with another financial topic on Gen X financial behavior.

Well, when it comes to baby boomer’s knowledge on money management, some people are inclined to give them a 10 out of 10. Most of the people think, our previous generation possesses more financial knowledge than the millennials. It’s said that millennials are delusional about money.

Even the previous older generation often claims that millennials are clueless on every subject, especially about money.

Though millennials are managing their student loans, meeting their targets at work, home loans, they lack the ability when it comes to financial know-how.

But millennials consider themselves as financially savvy.

We should find out what stats are saying about it?

Unfortunately, many survey reports reveal that millennials fall short on financial knowledge.

A research was conducted by the Financial Industry Regulatory Authority’s Investor Education Foundation. During the research, a number of financial literacy questions had been asked to more than 5,500 young people (aged 23 to 35).

Based on that research, a recent survey was held by the National Endowment for Financial Education and George Washington University. The report revealed that only 8% of the surveyed people have profound financial knowledge, while a quarter or 24% have only a basic understanding of money management.

The shocking fact is 69% of them claimed that they are quite savvy on financial know-how.

Ted Beck, the endowment’s president and CEO, said that “This generation is diverse and highly educated. However, their overconfidence puts them in an extremely fragile financial position, and sadly, they don’t realize it.”

Confidence is a good thing; it develops self-esteem, but overconfidence can be dangerous when it comes to managing finances.

Kay Pfleghardt, a registered financial associate with Family Wealth & Legacy LLC., is a millennial and claims that millennials often underestimate the value of financial peace.

If millennials give importance to their student loan obligations, they can easily build a golden nest egg for their future. If they prioritize on an emergency fund, they will never fall into further debt obligations and they will gain a sense of accomplishment.

She quoted that, “This is especially true for millennials, as the vast majority of other millennials around them have failed to do this one simple thing.”

Besides all negative impressions about millennials’ money behavior, some research revealed their credibility on money management.

According to a 2016 Bank of America/USA Today report, it is true that millennials are less likely to pay their rent and health insurance premiums. They even contribute a very insignificant money to their retirement fund.

But it is also true that they are more burdened with student loan debt than the previous generation. Unfortunately, millennials appeared on a shaky economic situation compared to the previous generation.

As per the Young Invincibles report on Federal Reserve data, millennials earn 20% less money than the baby boomers did at the same age.

Pew Research Center’s senior editor Bruce Drake has said, “Millennials are the first in the modern era to have higher levels of student loan debt, poverty and unemployment and lower levels of wealth and personal income than their two immediate predecessor generations had at the same age.”

The Great Recession impacted all millennials’ financial behavior. It has changed how they save, spend, and deal with banking issues.

The good sign is they learned some valuable financial lessons in a hard way.

According to the 2015 Goldman Sachs report, millennials are good in making important financial decisions. They often postponed marriage until they settled with good savings, a home, and a car. They also dislike spending money on luxury goods.

One of the most important things is they have profound knowledge on technology, which helps them gain financial savvy.

According to a survey, “The Great Recession also made millennials more averse both to credit cards and credit card debt.” Nearly 36% of them have no credit card debt.

Well, a lot of statistics are there. But we need to find out who deals with finances better – a millennial or a baby boomer.

Millennials vs baby boomers: Who manages money better?

Millennials are now the largest living generation in America, but when it comes to saving money, baby boomers are the winners.

There are 75 million baby boomers (aged 52-70) who control nearly about 70% of all disposable income in our nation. They will inherit about $15 trillion dollars over the next 20 years. As per the financial analysts, baby boomers will continue inheriting it over the next several years.

1. Money management

Baby boomers are really remarkable money managers. They are more careful about saving money and building a good retirement fund for their future.

The baby boomers took advantage of employer retirement fund, pension fund, and other retirement savings fund to grow their hard-earned money.

They saw a big growth in investment during the 70s, 80s, and 90s when interest rates were in double figures. However, sadly, they faced less profit later due to the downturn in the investment market. But today interest rates are below 1%. They didn’t ignore their monthly financial obligations (rent, utility bills, credit card bills, etc.).

On the other hand, millennials are more concerned about their living cost, mortgage, and student loan debt. Since the millennials’ earning is not decent, they are unable to establish their retirement fund.

But when it comes to living within means, millennials beat the baby boomers. The extreme economic turmoil teaches them how to survive with lower wages and job insecurities.

Many millennials have huge student loan debt, which engulfs the major portion of their monthly income. They have the less available capital for savings and investments. But, they survive by doing hard work at their job. Most of the millennials have more than one or multiple income sources to manage their lifestyle.

2. Investment

It is said that in investment, millennials are more risk tolerant than baby boomers. The older generation often took the help of financial advisors before investing their money. This is because when they were growing up, they weren’t able to get financial information easily.

Now, millennials can get important information from the internet so millennials are more hesitant to seek financial advice. They often make their own investment decision. Thus, they often encountered loss in investment.

It is also true that due to the rising educational cost and lower wage, either they are investing insufficiently, or starting the investment journey late.

What financial experts think about millennials’ financial behavior

Millennials are the generation who are haunted with the huge student loan debt burden. It has a great impact on their financial behavior.

Due to their outstanding loans, many millennials delay in achieving some major milestones in their life (buying a home or a car, getting married, and having children). And 48% of millennials admit that they have no emergency fund and they are unable to come up with $2,000 to combat an emergency.

Less than one-third or 32% said that they have only 3 months of household expenses saved. While 30% of millennials had overdrawn their bank account; either took out a loan with their retirement account or made a hardship withdrawal.

But financial experts warn that if they don’t change their financial behavior, the consequences of their actions will affect their financial future.

Here are some financial experts’ suggestions for millennials to improve their financial health.

1. Kay Pfleghardt, a registered financial associate with Family Wealth & Legacy LLC. suggests:

Setting up an automatic transfer to a savings account is important.

According to her, building an emergency savings cushion is important to avoid incurring credit cards debts.

She says, by depositing the money directly into the checking account, millennials can build their emergency saving fund easily. They just need to set an automatic transfer in their bank account.

Thus, the money gets deposited on the day they receive their paycheck. She advises to simply automate your savings. It is the simplest way to build a habit of saving money by keeping the disposable income out of sight and out of mind.

2. Robert Johnson, president, and CEO of The American College of Financial Services suggests:

Investing for retirement is crucial instead of saving for retirement.

According to him, accumulating wealth over a longer period is one of the greatest assets one can achieve in life.

The UBS study (The Union Bank of Switzerland) showed that millennials had an asset allocation (large percentages in cash and little in equities) that was similar to the baby boomers.

He said millennials are reluctant to embrace investment risk, but they have the ability to bear the risk. So they need to invest in the long-term equities instead of buying bonds and stacking cash. Thus, they can get higher return than ever.

He quoted “If Millennials remain unwilling to embrace risky assets, they will find that they will have to set aside a much higher portion of their income for retirement or to work much longer than they planned to.”

3. Flynn Zaiger, a Millennial founder of a digital marketing agency located in New Orleans suggests:

Improving money knowledge is imperative.

Due to poor financial knowledge, most of the millennials fail to achieve their financial goal. He suggests them to save money proactively. Thus, they can achieve their financial goals with time.

He quoted, “Connecting their current situation with their future is the best way to increase the desire for greater money-management knowledge in Millennials.”

Most of the financial experts agree that in some ways, millennials are smarter than baby boomers. Here’s why:

3 big ways millennials are ahead of the baby boomers

1. Millennials are quick to learn new payment technologies

Almost 51% of millennials are taking advantage of new mobile-based payment technologies over cash, debit and credit cards. In comparison, only 17% of baby boomers are able to understand this new payment method. Some of the smartphone accessible payment methods (Mobile check acceptance, digital wallets, and mobile bill pay) are very popular among this generation.

2. Millennials know credit card debt is a “no-no”

According to a survey by Princeton Survey Research Associates International, almost 63% of people aged 18-29 don’t keep a single credit card.

They prefer to use cash, mobile pay, or prepaid cards for purchasing things. Thus, they can track their spending easily. Also, using prepaid cards instead of credit cards help them to avoid incurring credit card debts.

According to David Smith, head of marketing for Kaiku Finance, a provider of prepaid products, “Already immersed in student loans, millennials are not interested in running up credit cards and accruing more debt. They like the convenience, the transparency regarding fees, and the predictability that prepaid cards have to offer.”

3. Millennials prefer to buy home that they can afford

Millennials are calculative; they know the huge mortgage obligation can overwhelm them. They take their time and prefer to buy a home by staying within their means. They don’t believe in “the bigger, the better” concept. They believe that staying in a small cozy home is better than counting a big amount of mortgage payment every month.

Pamela Hanson, founding partner of Downcity Home Closing in Barrington, R.I, said “A trend we’ve noticed as a residential home closing firm is that more often than not, millennials buy under their means. Not so with the generations that preceded them where bigger was better, and the plan was to finance as much of their home purchase as possible.”


At the end of this detailed discussion, we can conclude that the millennials are not at all dumb when it comes to handling their finances.

They prefer to follow their own terms. They are more willing to adopt the latest trend and apply it even when it comes to finances. And they don’t want to follow their previous generation’s financial methodology.

They have taken a lesson from the investment market when baby boomers experienced a bad phase in the investment market. They have also learned some crucial financial lessons from the Great Recession, but they still need to learn more things in the financial field.

They have to work hard to prove their credibility on building a good retirement fund to protect their financial future, saving money for an emergency fund and savings account, making monthly payment obligations (utility, insurance premiums, debts), investing, and financing their child’s education, etc.

It is a good sign that millennials are no longer budget haters. And with the help of the online budgeting apps, the task of crafting a monthly budget is becoming easier.

TD Ameritrade’s study has revealed that “Millennials are 10 times more likely to use budgeting apps than our previous generation. 80% of millennials have a budget in place as opposed to a mere 61% of baby boomers.”

Lastly, both the baby boomers and the millennials have experienced a difficult economic situation. While the millennials faced extreme financial constraint, baby boomers have seen an extreme investment downturn due to poor investment market performance.

Both of them got affected by the poor economic phase. Millennials lost their jobs or forcefully had to join a low-salaried job. They delayed their marriage or home purchase. They are still facing sky-high education cost.

On the other hand, baby boomers were unable to build good retirement savings due to the poor performance of the investment market. Many of them have faced an uncertain retirement or worked until their death, to survive.

To sum it up, instead of being overconfident, if the millennials concentrate on basic financial principles laid out in this article than they can succeed financially.

Author’s Bio: Amy Nickson is a web enthusiast. She completed her graduation from Oglethorpe University, Atlanta, Georgia. She works as a financial writer and she shares her expertise through her crisp and well researched articles based on money management, money saving ideas, debt, and so on. You can follow her on Oak View Law Group where she shares her expertise on the personal finance field.

Brian Robben

Brian Robben is the founder of Take Your Success, a site dedicated to helping entrepreneurs and wantrepreneurs grow a profitable business and reach freedom. For in-depth training, visit:

This Post Has 2 Comments

  1. game of thrones s07e03 720p

    The Starks are the only house left with almost all their royals alive.

    1. Brian Robben

      How’s this relevant by any means???

Comments are closed.