The Balance, one of the world’s largest personal finance websites, announced the findings from its Affluent Millennial Money Study, which found that 86 percent of affluent millennials consider being debt-free as a marker of personal success, yet more than 50 percent don’t pay off their credit card bills each month.
In partnership with Chirp Research,the nationwide study targeted millennials with an average household income(HHI) of $132,000 to understand how they view credit and debt, along with details on how they learned about money and how that education influences where they spend, save, and invest.
“As spending peaks around the holidays, it’s important to remember that it’s rarely—if ever—a good idea to take on credit card debt, and the disconnect is likely a result of the widespread misconception that carrying a credit card balance helps your credit score, when it actually doesn’t,” said Christine DiGangi, Editorial Director at The Balance. “The good news is there’s a huge opportunity to help people better understand their money, and they have ample time to correct their perceptions of debt.”
Other key findings from the study include:
Millennials Are Carrying Debt And Not Paying It Off:
• Nearly 90% report currently holding debt.
• More than half (51%) carry mortgage debt, followed by credit card bills (50%), car loans (46%), student loans(39%), personal loans (21%), and medical debt (18%).
• On average, affluent millennials spend over 17% of their personal income on debt repayment, second only to their fixed expenses like rent, utilities, and food (40%).
• Despite that, debt repayment comes in sixth in the list of top financial priorities, behind paying bills (88%),feeling financially secure (87%), being responsible with the money they have(85%), living comfortably (81%), and saving for retirement (79%).
Consequences of Poor Financial Education:
• Affluent millennials who report high financial anxiety, are more likely to have credit card debt than their financially confident counterparts (69% vs 42%).
• Conversely, affluent millennials who said they are confident about their finances are 5X as likely to be debt-free.
• 32% report that financial insecurity causes them to avoid socializing, and 28% fear they will never get out of debtor achieve financial security.
“The findings demonstrate the powerful connection between financial literacy and the confidence to make good decisions with money,” said Dr. Joetta Gobell, Vice President of Research and Insights at Dotdash, The Balance’s parent company. “Young adults need to understand that connection, and be able to confidently manage their finances while responsibly managing their debt.”