These findings come from the latest Merrill Edge report, a survey of those ages 18 to 34 and described as mass affluent, meaning they have good jobs and some savings. Seven in 10 Millennials say they are active in their saving and investing activities. Yet less than half are willing to discuss their activities with anyone other than a spouse.
These findings underscore the growing need for financial education in school and at work. If young people are taking the reins of their financial future they need to know how to go about it. This is especially important early in adult life, when small savings can turn into big money 40 or 50 years from now, due to the power of compound growth.
Money has long been a taboo subject for conversation inside or outside the household. Some 70% of adults think the topic is just plain rude in a social setting, according a survey from Ally Financial. By some measures, Millennials are reversing that. Nearly 70% now say they discuss money matters with family—and they give those conversations more thought: 45% would rather schedule a dinner discussion than raise money issues on the fly.
But we haven’t come nearly far enough. Young people still take too much financial advice from family (36%) and friends (22%), Merrill Edge found. These sources may be well meaning but probably do not have all the information or knowledge they need to make the best decisions.
And while Millennials are do-it-yourselfers with their money, they clearly lack basic understanding of important concepts. More than half—three quarters if you include those who could not answer—believe they can retire on less than $1 million in 30 or 40 years. But inflation likely would cut the spending value of that figure by half or two-thirds, which isn’t nearly enough.
It doesn’t take a lot of financial education to get young people started off right. If noting else, they just need to appreciate the value of starting saving early and how simple and cost effective it is through index funds or target-date mutual funds. Of course, there is much more to understand than that. But a do-it-yourselfer can do pretty well just knowing how to best take advantage of an employer-sponsored savings plan.