Helping Millennial Meet Their Financial Challenges: New Research Finds Millennials Resorting to Extremes to Make Ends Meet

By Tisdale, Stacey | Black Enterprise, March 2016 | Go to article overview

Helping Millennial Meet Their Financial Challenges: New Research Finds Millennials Resorting to Extremes to Make Ends Meet


Tisdale, Stacey, Black Enterprise


A SURVEY BY PRICEWATERHOUSECOOPERS AND George Washington University's Financial Literacy Excellence Center paints a disturbing picture of the economic circumstances of millennials. The study found that a large number--nearly 30% of those with a college degree--have turned to alternative financial services, such as payday lenders and pawn shops, over the past five years in order to ' meet their financial obligations.

"Millennials confront greater difficulties--including economic uncertainty and student debt--than those who came before them," PricewaterhouseCoopers and George Washington University researchers say. "Millennials are a high-impact generation poised to shape the national and global economy in new ways--and their economic influence is expected to grow over the next decade. But the platform from which they will wield this influence is a troubling one," researchers add.

Rianka Dorsainvil, CFP, president and founder of Your Greatest Contribution and president of the Financial Planning Association's NexGen community, points out the long-term impact of short-term financial fixes.

"Taking out payday loans or auto title loans is a very dangerous practice and can leave the lendee in more financial harm than good," says Dorsainvil.

"If you read the very fine print, according to the Consumer Financial Protection Bureau, the finance charge with the loans may range from $10 to $30 for every $ 100 borrowed. A typical two-week payday loan with a $15 per $100 fee equates to an annual percentage rate (APR) of almost 400%. In the long run, if the lendee is not able to pay back the loan in full, they may end up paying more back in fees than they borrowed," she adds.

As for how to avoid getting into short-term cash crunches and building wealth for the long term, Dorsainvil recommends the following:

1 Set up a rainy day fund: Look at your spending for the past 30 days and ask yourself: Are the items I'm purchasing a need or a want? …

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