Roughly Three Quarters of Millennials and Gen Z Report Suffering From ‘Financial Trauma’ — 3 Root Causes and Expert Advice
Written by
Yaël Bizouati-Kennedy
Edited by
Maria Concepcion
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A majority of Americans say they suffer from “financial trauma,” and for younger generations, stand out even more in terms of their reported levels of stress and financial anxiety.
Indeed, new Experian research, released Oct. 25, found that a whopping 68% of American adults feel they have suffered from, or are currently suffering from, “financial trauma,”-which it describes as negative feelings and angst related to financial matters.
And for Gen Zers and Millennials, these feelings are even more prevalent, with 73% and 77% of them, respectively, experiencing these feelings.
Christina Roman, Experian’s consumer education and advocacy manager and a Millennial herself, said that she was not surprised by these findings.
“Many of us witnessed the financial challenges our parents faced with the recession and the pandemic hit at a time when many young people were working to establish or build on their financial independence,” she said.
She added that while many of the factors impacting young people today may feel out of our control, sometimes financial stress is only compounded because people lack the knowledge and guidance to know where to start.
Economic Challenges
Roman said that many adults have experienced financial losses due to job loss, economic challenges and the pandemic.
“This is true for America’s youngest consumers, with 32% of Gen Zers and 38% of Millennials stating they’ve experienced significant financial losses due to job loss,” she said. “In addition, 36% of Gen Zers and 38% of Millennials stated they’ve experienced significant financial losses due to the pandemic.”
Witnessing Parents Argue About Financial Matters
Another contributing factor to the stress and anxiety they are feeling, is having witnessed parents argue over money, said Roman.
Indeed, the research found that 65% of Gen Zers and 61% of Millennials reported witnessing their parents argue over money often or occasionally growing up.
Lack of Financial Education
Finally, Roman said that financial education may also be contributing to the stress young people are currently feeling.
“Most Gen Zers – 74% – and Millennials – 75% – stated more financial education would help reduce their financial stress,” said Roman.
What Can They Do to Alleviate This Stress?
Roman said that Experian’s goal is to normalize conversations about money and financial stress and connect consumers with the financial education and resources necessary to help reduce their stress and bring financial power to all.
Find Trusted Sources
In turn, she recommends finding trusted resources and getting your questions about credit answered.
“Knowledge truly is power and is one of the first steps to overcome financial stress,” she said. “In this age of social media and information overload, it can be tough to identify trustworthy resources for financial literacy.”
Yet, she added that there are many educational resources on Experian’s website, for instance, including the Ask Experian blog which has answers to many common questions about credit and personal finance.
Get Engaged
Don’t be afraid to look at your credit report and know what’s there, said Roman.
“Doing so is one of the best ways to see where you stand from a credit perspective,” she said, adding that you can get a free copy of your credit report and FICO Score for free through the Experian mobile app.
You can also get a free credit report from each of the three credit bureaus once a week through AnnualCreditReport.com, she added.
In addition, she said there are some specific factors to pay attention to, such as utilization rate and payment history.
“Remember, credit can be a financial tool, it’s debt that can be a financial problem,” she added. “Many of the things young people want in life, from purchasing a home, renting an apartment, or buying a car, will require a strong credit history. Addressing the factors influencing your credit score can help you improve your credit standing over time to qualify for better rates and terms.”
Use the Tools Available to You to Help Build or Improve Your Credit History
Consumers can get credit for paying the bills they’re already paying, such as video streaming service payments, cell phone payments, rent payments and more, for instance through Experian Boost, explained Roman.
In addition, she said that for young consumers looking for more tailored financial support, the National Foundation for Credit Counseling (NFCC) has personalized resources available to help.
“While reducing financial stress will take a multi-faceted approach and will, in many ways, depend on a consumer’s unique financial situation, our research revealed a common theme: more education would help consumers feel better about their financial situation,” said Roman.
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