Millennials are on the fast track to becoming the most educated generation ever. A 2015 study from the Pew Research Center found that 27 percent of millennial women and 21 percent of millennial men have at least a bachelor's degree. Comparatively, just 20 percent of Gen X females and 18 percent of males had achieved the same level of education when they were between the ages of 18 and 24.
However, there seems to be one major gap in millennials' education: personal finances. A 2015 report from Bank of America found that only seven percent of millennials have ever taken classes, read books, or used any online resources to learn about their finances.
You might be thinking, "So what? They'll figure it out. That's what growing up is all about."
The underlying problem is that, by leaving millennials in the dark about the importance of financial responsibility, we're creating a cascade of inadvertent negative downstream effects.
Here are three side effects of the relationship between millennials and money:
1. Unnecessary stress
A 2015 PwC survey found that 52 percent of millennials suffer from financial stress. And that's not surprising considering the same study found 35 percent of the generation has a hard time making ends meet each month.
Why are people who are just beginning their adult life already be under such financial strain? A driving factor is that they don't know how to budget. The aforementioned Bank of America study found that, of the millennials who felt their parents did not do a good job teaching them about finances, only 37 percent have a monthly budget.
So it's understandable that, by the end of the month, they're feeling the pressure on their wallet. The solution is to give millennials more information about managing money. The first step is learning that even the little things add up.
For example, data from the lifestyle assessment quiz on PathSource, my company's career exploration app, showed that on average a young adult can save $2,892 a year simply by choosing to eat primarily at home instead of going out. And if a person went from going clothes shopping every few weeks to a couple times a year, they would save an average of $6,420.
Just with those types of small lifestyle changes, millennials would experience less stress stemming from money.
2. Uninformed career choices
We tell children that they can be whatever they want when they grow up. But then we never really teach them about the financial realities of those choices. Even in college, when young adults are deciding what they want to do with their lives, they can learn the skills they need in the workforce but not what they're worth.
A study from the University of Chicago took a look at students' perceptions of the earning potential of certain degrees. The researchers first asked participants what they thought they would be making by the time they turned 30. The participants' answers were way off. For instance, males pursuing an economics degree had expectations that were, on average, $35,000 over real-world salaries. After they were told the actual salaries they could make with their degrees, 12 percent of participants decided to change their major.
The disparity between millennials' financial expectations about their careers and the reality isn't a small distance, it's a yawning gulf. And it leads to uninformed decision-making about what career is a good fit for their desired lifestyle. The outcome: a lack of professional fulfillment and career switching, often leading to other problems down the road.
3. Delayed life milestones
It's no secret that millennials are putting off big adult milestones, unlike previous generations. And while choosing to buy a house or getting married is a complex decision, finances play a big part.
A 2015 survey from Student Loan Hero found that student debt has caused one in four millennials to put off moving out of their parents' home. What's more, one in five have postponed starting their own business. Another study by CareerBuilder found that 69 percent of employees between 18 and 24 and 41 percent between 25 and 34 have not been able to start a retirement fund yet.
Pulling the trigger on these types of decisions is a big part of growing up. Whether it's the right measurement of success or not, getting a job, buying a house, and being financially independent are big milestones in today's society. But millennials are stalled out and aren't part of the process yet, partly due to a lack of financial knowledge.
Until millennials become more money-savvy, we'll continue to see a range of negative impacts on their lives. Which leads to the question, who's going to step up and give them the knowledge they need?
What are some ways we can begin to educate millennials about their money? Share in the comments below.
Aaron Michel is the co-founder and CEO at PathSource, a career exploration solution helping students and job seekers make better career choices with its free iOS mobile app. To navigate your infinite career possibilities, connect with Aaron and the PathSource team on Twitter, Facebook, and LinkedIn.