Follow up – it’s one of the essential keys to success in life. You’ve heard of it before, but maybe not in a financial context. You know you should follow up after a job interview by sending a thank you card and checking the status of your application. You know you should follow up with the doctor when your sick by taking your medicine as prescribed and going to all of the required appointments.
But why, as millennials, do we fail to follow up with our money and financial life? It’s a growing trend that is harming millennial financial health.
Millennials Are Late On Their Bills
Millennials, as a generation, have a larger delinquency rate on their bills compared to all other ages. According to a recent study by the American Institute of CPAs, more than a quarter of millennials surveyed had missed a bill or been contacted by a creditor due to late payments. At the same time, Experian recently announced that millennials, as an age group, have the lowest credit scores as well.
Why are millennials (or anyone really) late on their bills? It’s a lack of follow up and understanding of financial organization. Many young adults expect everything to just happen. However, too few are following up with mail (yes real physical mail) and then writing checks or setting up online bill pay.
Another gap is that millennials move more frequently than any generation – they typically have several residences in college, then a few more after college. As a result, the billing address on credit cards and other bills may be incorrect. Once again, this is a financial literacy follow-up issue. When you move, you need to update the address on file with all of your financial institutions, so that you can receive the statements and not miss anything.
Millennials Don’t Think They Have Student Loans
Another scary statistic is that many millennials don’t even think they have student loan debt. A recent study from the Brookings Institute found that 14% of students surveyed who were in student loan debt thought they didn’t have any. On top of that, another 28% didn’t think they had Federal student loans – so they didn’t even know what type of loan they received.
Once again, a scary financial literacy issue facing millennials that involves follow up. When you take on debt, you have to follow up and understand what type of debt you have, how much you have, and what you’re going to owe. Failing to do so (which is impacting a large portion of millennials), can result in poor credit scores, which in turn will harm their abilities to buy a car, rent an apartment, or even buy a house in the future.
We Need To Improve Financial Literacy
As a society, we need to improve financial literacy among millennials, but it’s a challenge. There is an entitlement culture that has developed where millennials have an assumption that everything will just be taken care of and “I don’t need to worry about it”.
In many ways, everything can easily be taken care of with a little follow up. We need to reach millennials financially in ways they understand – by teaching them about apps that could help manage all of their accounts in once place, and showing them how to setup online bill pay. Millennials don’t want to receive paper statements, they don’t want to follow up and track down bills, they want it automated and done through technology.
All of that is possible with a little financial education about the tools needed for financial organization. Then, they won’t have to follow up…as much.
By Robert Farrington
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which course of action may be appropriate for you, consult your financial advisor.
Investment advice offered through Gerber Kawasaki Inc, a registered investment advisor. Please consult your investment professional before acting on any advice.