Millennials with lower credit scores struggle to make ends meet.
Broke millennials never learned much about personal finances, and now that they’ve got themselves in a financial hole, it’s going to be more than a struggle to get out.
More than half (58 percent) of nonprime millennials — those with credit scores under 700 — find themselves living paycheck-to-paycheck and 41 percent run out of money every other month, says a study from financial service company Elevate.
“It’s troubling to see just how hard of a time these millennials are having managing their day-to-day finances,” says Jonathan Walker, executive director of Elevate’s Center for the New Middle Class. “Our research shows that half of nonprime millennials worry all the time about their monthly living expenses.”
There isn’t just one specific financial situation they are having difficulty with. Survey results show that these millennials struggle with multiple financial situations that their prime counterparts don’t.
Nonprime millennials are 45 percent less likely to maintain a monthly budget, and 58 percent less likely to put aside money in savings than prime millennials. Thirteen percent of nonprime millennials say they regularly overdraft their checking and savings accounts.
They’re also 71 percent less likely to turn to credit cards if they needed to come up with $1,200 than prime millennials.
What is keeping these millennials down?
There are more than a few reasons why these millennials struggle with their finances compared to others in the same age group.
Another study from Elevate revealed that nearly as many nonprime millennials put in the same amount of effort researching finances as prime millennials. Forty-four percent compared to 47 percent respectively do their homework on how to manage their personal finances.
However, millennials with credit scores lower than 700 are twice as likely to experience stress over their finances.
Elevate’s findings suggest that nonprime millennials didn’t benefit as much from watching their parents handle their finances as prime millennials. Only 49 percent of nonprime compared to 61 percent of prime millennials say they benefited from observing their parents growing up.
Moreover, only 20 percent say they were actively taught financial management skills from their parents compared to 33 percent of prime millennials.
They were also more likely to have made mistakes from learning by trial and error.
Seventy-two percent of nonprime compared to 41 percent of prime millennials said they learned by trial and error — which could’ve resulted in more mistakes made that damaged their credit than prime millennials, who avoided those mistakes from lessons passed down by their parents.
Elevate has been researching this group for a while now. They released a survey three months ago on nonprime millennials and their living experiences.
This group is more likely to work multiple jobs, at an hourly rate, and they’re 75 percent more likely to have been laid off more often than their prime counterparts.
Nonprime millennials are less likely to be the sole decision-maker in their household. They’re 68 percent more likely to live in a house with at least four people, and 55 percent more likely to live in a house with a child.
“Factors such as lack of financial education, income volatility, too much debt and unexpected expenses contribute to difficulty in maintaining a balanced financial life,” Walker says. “These circumstances combined with lack of credit create a stressful situation for nonprime millennials. While it’s common to experience stress, carrying the burden of financial anxiety can affect other aspects of life, such as personal relationships.”
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Article last modified on September 6, 2017. Published by Debt.com, LLC . Mobile users may also access the AMP Version: Stuck in a Rut: Some Millennials Will Always Be Broke - AMP.