The buying behavior and financial know-how of the Millennial generation — people ages 16 to 34 — have been in the news a lot recently, and for good reason. Today’s young adults hold an average debt of over $50,000 and face a high unemployment rate. Yet despite this issue, research reveals they hardly know the first thing about managing their money.

Bad habits are easy to fall into—especially when you’re in your 20s. Some of the worst money habits among millennials, according to recent surveys include overspending, undersaving and racking up unserviceable debt.

This is part 1 of a 3 part series focused on Millennials and their financial education

1. Millennials don’t understand how they got into debt and have no strategy to repay it:

Schools make it very easy for students to borrow money. Financial aid offices have designed their easy loan procedures for on-line accessibility. Students simply follow a procedure of web-pages that have convenient, easy ‘click here’ and ‘i accept’ buttons that suddenly plunge them into 10’s of thousands of dollars of debt. Unfortunately, most millennials don’t know how they can repay that debt reasonably. Once you graduate, you receive a statement from your lender outlining a monthly payment plan. More than 75% of borrowers don’t think that they can change or modify it to meet their needs.

According to CNN Money, “…40 million Americans now have student loan debt.” Experian cites: “Millennials have an average of $23,332 of credit card debt”“ On average, Millennials are carrying over, “$35,000 in order to obtain their bachelor’s degree.”

According to a new report from the National Association of Colleges and Employers, “Students who graduated from college in the class of 2014 median starting salaries were, $45,478.”

As a result, they are simply defaulting on their student loans and credit card debt because they think they can’t pay them. They haven’t been educated about different repayment strategies available to them.

2) Bills – what are these things?

Millennials are just not use to traditional bills. Over 25% are late with at least 1 payment per year, leading to the lowest credit scores among today’s generations. The problem is: banks, lenders and just about any other creditor has traditionally offered standard monthly/weekly payback procedures (and will continue) to require traditional methods of collection. The tech may change, but the concept of a monthly bill is not going away. Millennials have grown up in an ‘instant gratification’ environment, and have not been taught a good system for organizing their finances and paying their bills. Millennials are having a hard time figuring it out

3) Millennials Don’t Understand Money

Millennials aren’t investing because they don’t understand the stock market and money in general. Most curriculums do not teach investing methods. Millennials reflect on recent memory – 2008 – when everything crashed. They saw their parents lose 50% of their savings. They saw millions of people lose their jobs.

However, history shows investing in the stock market is one of the most effective ways to build wealth over the long term. Even with the 2008 crash, the stock market is back at all time highs.

From 1928 to 2013, the S&P 500 returned 9.55%, on average. From 1964 to 2013, that average was a little higher at 9.89%. If you had that money in a savings account, you’re lucky to have earned 1.1% on average. Even less the last 5 years.

The bottom line is that, while recent history has been rocky, the long term returns are what millennials should focus on.

4) Millennials Don’t Have Enough Emergency Funds

The T. Rowe Price study announced that, “Millennials are more likely than baby boomers to seek help of family and friends (55% vs. 17%) if faced with a sudden financial emergency.” Sure, it’s tough to save when you are starting out. However, financial education and tools will help you understand your daily & weekly expenses. This allows you to cut down on unnecessary expenses and save enough pennies to face financial emergencies. This is about education and developing good financial habits.

5) Millennials Are Not Following Up

Follow-up: it’s one of they keys to success in life. Yet so many millennials are not doing this. The bottom line is that millennials need to learn that not everything will be given to them – life and facing adulthood is tough, you have to follow up. The Khan Academy cites: “Even though Millennials are confident in their ability to manage finances, they feel less experienced in their actual knowledge of finances (17%) as opposed to their expertise in things like social media (34%) and food (33%)”

— It’s not over yet. Yes, millennials have had to launch their working lives in uniquely volatile times. But the past is no determinant of the future, and there are many chapters yet to be written. Please tune in for PART 2 of this 3 PART series

Larry LaRose is the President of PNL Coaching, a firm dedicated to coaching and training individuals and professionals. We can be found online here:

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