Most Millennials Make Payments Via Smartphone, but Fewer Track That Spending
A new report, released by the TIAA Institute and the Global Financial Literacy Excellence Center (GFLEC) at the George Washington University School of Business,
found there is a financial literacy gap among millennials. The report
also found that while most millennials use their smartphones to manage
their personal finances, financial technology (fin-tech) does not
necessarily improve their personal finance management practices.
The “Millennial Financial Literacy and Fin-Tech Use: Who Knows What
in the Digital Era” study utilized the TIAA Institute-GFLEC 2018
Personal Finance Index (P-Fin Index) to examine the personal finance
knowledge of millennials. Millennials answered 44% of P-Fin Index
questions correctly, compared to 50% of the US adult population.
Moreover, younger millennials (ages 18-27) answered 41% of P-Fin Index
questions correctly, compared to 47% of older millennials (ages 28-37).
literacy among both older and younger millennials is lowest in the
areas of comprehending risk and insuring. Understanding insurance, in
particular, saw the greatest gap between younger and older millennials.
Financial literacy is highest in the area of borrowing and debt
management for both younger and older millennials.
The report also
examined how millennials use technology to manage their personal
finances and the effect of financial technology on financial outcomes.
Approximately 80% of millennials use their smartphone for transactional
purposes like paying bills and depositing checks, and 90% use their
phones for informational activities like tracking their spending.
the 23.8% of U.S. adults who are Mobile Wallet Users, according to
AudienceSCAN, 24.5% are ages 25 to 34. Payments aren’t the only activity
this audience is using their phones for. Most are active on social
media. About 80% have a Facebook account, 60.6% actively watch YouTube
videos, 44.7% participate on Instagram and 42.8% are active on Twitter.
They’re 22% more likely than other adults to share a good experience on
social media, and 25.9% take action after seeing content on social media
that isn’t even an ad.
While fin-tech offers a convenient way to
manage finances, users do not always make savvy financial decisions.
Almost 30% of millennials who use their smartphone to make mobile
payments report overdrawing their checking account, compared with 20%
who do not make mobile payments. Further, one-quarter of those who track
spending with their smartphone report overdrawing their accounts,
compared with 20% of those who do not track spending via their
According to AudienceSCAN, 61.9% of Mobile Wallet
Users also do their banking online. These businesses can easily fill the
financial needs of these consumers who are in need of financial
planning assistance by selling them more products to aid in tracking
Fin-tech users benefit from being financially
literate; those with high levels of financial literacy are less likely
to overdraw their checking accounts.
“The low level of financial
literacy among millennials speaks of the importance of equipping this
large generation with the knowledge and skills that are needed to make
financial decisions in the digital era,” Annamaria Lusardi,
Academic Director at GFLEC and the Denit Trust Chair of Economics and
Accountancy at GW. “This study shows that fin-tech users have different
needs and characteristics, providing many opportunities for innovation
for fin-tech developers.”
Over the last year, Mobile Wallet Users
have been targeted by advertisers through a number of digital media.
According to AudienceSCAN, 63.6% of Mobile Wallet Users took action
after receiving an email ad last year and they’re 69% more likely than
other adults to take action after seeing an ad during a directory
search, both online and in print. Text link ads on websites also
inspired 56.4% of this audience to take action within that time period.
Don’t write off traditional though. Last year, 71.4% took action after
seeing a commercial on TV.
AudienceSCAN data is available for your applications and dashboards
through the SalesFuel API. Media companies and agencies can access
AudienceSCAN data through the AudienceSCAN Reports in AdMall.