Market Overview

Despite Good Intentions, Millennials and Gen Z Are Demonstrating Unrealistic Expectations About Their Financial Futures


While teens and young adults are confident about the future, they lack
basic money know-how critical to long-term financial success, according
to new research from Charles Schwab

A decade after the onset of the financial crisis, American young adults
are optimistic about their future financial success but demonstrate
behaviors that suggest they may be unprepared for the realities of
achieving it. New research from Charles Schwab indicates that while 81
percent of young adults age 16 to 25 witnessed their parents experience
financial hardship, 76 percent believe they will have a better financial
future than their parents. Unfortunately, they simultaneously face real
personal financial challenges—having incurred average savings of just
$1,628 and debt of $8,003—and seem to have a genuine lack of
understanding about debt in general.

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"Kids of the Great Recession are now on the cusp of financial
independence and making decisions that will have a lasting impact on
their long-term ability to build wealth. The good news is we're seeing a
lot of optimism, and we have an opportunity to harness that optimism by
setting them on a course toward lifelong financial success," said Carrie
Schwab-Pomerantz, President, Charles Schwab Foundation, and Senior Vice
President, Charles Schwab & Co., Inc. "A key takeaway is that young
adults want to learn more about money management, and they're looking to
their parents to teach them these critical skills."

Optimism may be misplaced and bad money habits persist

Over the past decade, there's been a tremendous shift in attitudes about
the financial future. While young people were "very concerned" about
their personal financial futures in 2009, the new 2018 research
indicates young people are much more confident about their financial

  • On average, young adults expect to retire at 60 years of age, seven
    years earlier than full Social Security benefit eligibility for their
    age bracket.
  • More than half (53 percent) believe their parents will leave them an
    inheritance, versus the average 21 percent of people who actually
    received an inheritance of any kind between 1989 and 20071.

But their optimism may be leading to bad money habits. Young adults are
accruing significantly more debt, but their savings don't meaningfully
increase: on average, Young Millennials (ages 21-25) have saved just 15
percent more than Gen Z (ages 16-20)—yet they have 169 percent more
debt. Another one-third (33 percent) of respondents say they skipped a
meal because they didn't have enough money.

Young people trust their parents for financial advice, want to learn

Most young adults (69 percent) say their parents are good financial role
models and their most trusted source for financial advice (39 percent)
compared to a bank, online resources and friends. And unlike previous
generations, most young adults today say their parents are more likely
to talk to them about money than sex (67 percent) and drugs (56 percent).

Young people also indicate strong interest in learning how to manage
their money, including how to make enough money to reach their financial
goals (71 percent), how to keep financial information secure (68
percent), how to save enough to be set in retirement (65 percent), how
to manage a budget for necessities (65 percent) and learn the difference
between good and bad debt (55 percent).

Troubling lack of knowledge about debt

At a critical point in their financial lives, there is plenty of
confusion about debt. Many young Americans do not understand the
fundamentals of debt—in particular the difference between good
and bad debt

  • Only 38 percent believe student loans are good debt.
  • Respondents are similarly split on whether car loans are good or bad
  • In addition, while 81 percent say they want to own a home, only 54
    percent believe that a mortgage is considered good debt.
  • Most concerning, 51 percent say they currently have some sort of debt,
    but only 3 percent would pay down that debt if given an extra $1,000.

"We live in an increasingly complex financial world, where our personal
responsibility for financial management has increased dramatically, but
our basic understanding of our finances has lagged behind,"
Schwab-Pomerantz said. "We need to commit to educating our youth about
money management, so they have the opportunities to achieve the
financial freedom they want and deserve."

Schwab provides a range of resources and learning programs to help
parents, guardians and young people make smart financial decisions and
achieve long-term financial success, including Schwab
®, a comprehensive and unbiased source of
financial education, guidance and interactive tools.

More information on the survey results can be found at

1 U.S. Bureau of Labor Statistics, "Inheritance and the
Distribution of Wealth or Whatever Happened to the Great Inheritance
Boom," 2011,

About the Financial Literacy Survey

The online survey was conducted by Logica Research (formerly known as
Koski Research) from June 12 to June 20, 2018, among 2,000 Americans
aged 16 to 25. Quotas were set so that the sample is as demographically
representative as possible. The margin of error for the total survey
sample is three percentage points.

About Charles Schwab

At Charles Schwab, we believe in the power of investing to help
individuals create a better tomorrow. We have a history of challenging
the status quo in our industry, innovating in ways that benefit
investors and the advisors and employers who serve them, and championing
our clients' goals with passion and integrity. More information is
available at
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Through its operating subsidiaries, The Charles Schwab Corporation
(NYSE:SCHW) provides a full range of securities brokerage, banking,
money management and financial advisory services to individual investors
and independent investment advisors. Its broker-dealer subsidiary,
Charles Schwab & Co., Inc. (member SIPC,, and affiliates offer a
complete range of investment services and products including an
extensive selection of mutual funds; financial planning and investment
advice; retirement plan and equity compensation plan services;
compliance and trade monitoring solutions; referrals to independent
fee-based investment advisors; and custodial, operational and trading
support for independent, fee-based investment advisors through Schwab
Advisor Services. Its banking subsidiary, Charles Schwab Bank (member
FDIC and an Equal Housing Lender), provides banking and lending services
and products. Logica Research is not affiliated with the Charles Schwab
Corporation or its affiliates. More information is available at and

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