‘We need to go beyond financial knowledge’

by: P.R. Lockhart

Finding ways to increase an entire generation’s wealth is a messy business.

That’s probably been the case for decades, but this time around things are even more complicated because millennials—those born between the early 1980’s and early 1990’s—had the unenviable task of coming of age in the wake of the Great Recession. Despite having the distinction of being America’s largest working generation, millennials have been entering one of the worst job markets in recent history while carrying unprecedented levels of debt and are struggling to attain the same levels of wealth achieved by previous generations.

“Financial capability is the opportunity to put knowledge into practice,” noted Dr. Terri Friedline during a recent event at New America, where she spoke with Parker Cohen of the Corporation for Enterprise Development (CFED), Sunaena Chhatry of the Consumer Financial Protection Bureau, and Vox education reporter Libby Nelson about how millennials could change their financial fortunes for the better.

For Dr. Friedline, the best way to accomplish this is by giving millennials the chance to practice financial decision-making. In her research, she has found that “the combination of having received financial education and being financially included via a savings account” is the most effective way to improve outcomes and help millennials prepare for financial emergencies or work toward long-term purchases. “We see that savings accounts and credit cards perform pretty consistently [as tools for financial experiential learning],” Friedline explained.

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