How Financial Illiteracy Is Compounding The Student Loan Debt Crisis
As a Millennial who also happens to be a business coach, one of the things I'm always asked about is our Millennial debt challenge.
If you've followed my work for any length of time, you know I've spoken at length about the financial challenges facing Millennials today.
While many factors have contributed to the growing debt among Millennials, I think it's important to turn our attention to solutions instead.
Without drastic change, the next generation will never break the cycle and achieve true financial freedom.
We have to understand debt is often the product of a faulty mindset.
The previous generation has done Millennials a great disservice. Honestly, a lot of Millennials have only been around to experience the best of times.
Until 2008, most Millennials were not very familiar with recession, unemployment or turbulent economic times.
Since many of us have been accustomed to only times of plenty, we were left unprepared to navigate a weak economy.
Thankfully for me, I had parents who provided me with a very solid foundation about finance. Those lessons have been invaluable to me, and they have saved me years of financial hardship and unnecessary stress.
Your mindset about money has everything to do with how you manage your finances.
Poor teaching produces a poor track record.
If you were not taught properly about money, now is the time to make a fresh commitment to understand and take control of your financial future.
The biggest debt facing Millennials is student loans. I feel for so many Millennials today.
Many have had private conversations with me about the enormous amount of student loans they owe.
They have also come out of school only to find the job market has drastically changed.
Most Millennials are working in jobs that will never afford them the opportunity to pay off their student loans. They are angry and feel like they'll never get out from the burden of student loans.
In a recent report by Forbes, it was reported that 30 percent of Millennials would sell an organ to get rid of student loans.
For an entire month this summer, the personal finance site, MyBankTracker, asked 200 of its users a series of questions to see how far they would go to get rid of student loan debt.
Fifty-five percent reported they would do a reality show to cancel their debt.
Another 38 percent even agreed they would take part in questionable health studies if it got rid of their student loans.
The reality is, Millennials are desperate to break free from the mounting burden of student loan debt.
Debt is creating delays in the lives of Millennials.
According to Time, Millennials with student loan debt are postponing major life events like buying a home or car, getting married and even having children.
It was seen that 45 percent of those surveyed stated they have already put off major life events because of student loan debt.
For borrowers between the ages of 18 and 29, that number rises to 56 percent.
Student loan debt reduces the borrower's ability to access other forms of credit.
Recent data from the Federal Reserve Bank of Philadelphia discovered countries with higher levels of student loan debt didn't have as much small business growth.
Student loans are impacting the lives of Millennials in a big way.
Many Millennials feel they were uninformed and unprepared to truly make sound financial decisions.
The only solution is to become financially empowered.
As someone who has studied finance and economics, I wish I could tell you there's a magical solution to this Millennial debt crisis.
However, the reality is, we got here because many Millennials lack financial literacy.
I want you to understand that just because you have a business or finance degree, that does not mean you understand finance.
Financial literacy is understanding the terms, conditions and restrictions of any financial transaction before you sign it.
Financial literacy is having an understanding about how your financial decisions impact your financial freedom.
Only with this level of understanding can we turn the tide and empower a new generation of financially empowered Millennials.