Editors' pick: Originally published Oct. 13.
In the now-distant past, young Americans defined their rite of passage as casting their first vote in an election, getting married, having a first born, being drafted into the military--or turning 18.
Now it's less about age-related milestones and more about money. According to a Bank of America study released last week, 62% of people between the ages of 18 and 26 said they did not feel like adults when they turned 18.
When asked to define adulthood in their own words rather than through survey prompts or multiple choice questions, "financial independence" was the most prevalent answer.
For those that do think they've crossed the Rubicon into adulthood, 60% attributed that to having a job. For those that still feel like kids, four out of five said it was because they still rely on their parents. Perhaps paradoxically, 60% who feel they've made the transition to adulthood owe it to parents who helped prepare them for the journey.
"Despite their best efforts, financial independence can be hard to come by for young Americans today," said Andrew Plepler, Environmental, Social and Governance executive at the Bank of America. "Starting out in the job market can be intimidating, especially with one in three (Millennials) carrying student debt." He added, "As a group that has seen the ups and downs of the economy, they know what they're up against."
The study was conducted online in English and Spanish by Nuremberg, Germany-based GfK Public Communications and Social Science from July 1 to July 21, 2016 and consisted of 2,180 respondents between ages 18 and 26.
Whether because of a dearth of income or burgeoning debt, the study found that Millennials lacked assets. Just under half (47%) of the 22- to 26-year-olds surveyed pay their own rent. 41% have their own health insurance, 27% put money into a 401(k) and 57% pay for their own cell phones. For younger Millennials — 18 to 21 —18% said they paid their own rent, 12% have their own health insurance and 26% pay for their phones.
In examining attitudes toward savings rate however, those 18 to 21 and 22 to 26 had identical responses—in each group, 58% said they are setting aside money for the future.
While social issues are top of mind for Millennials generally, economic issues are more important and will affect their vote in the upcoming presidential election. 65% said economic issues are more important to them than social issues; 34% said social issues were most important. But there was ambiguity also, which may lead to volatility on election day. The majority (79%) said they would choose the candidate he or she thought was best for the country; 21% said they would vote with their pocketbook.
A gender divide also surfaced. Women reported taking on more financial responsibility in all categories than their male counterparts. 61% of women ages 18 to 26 said they had some kind of savings account versus 55% of men. 36% of women do their own taxes compared to 28% of men and 39% have their own health insurance compare to 28% of men.
Many experts point to Americans' lack of knowledge in consumer finance across all age groups and Millennials in the survey voiced the same concern. The majority in the BoA survey say they were not taught enough about practical money matters in school. Education may have primed them for success in some ways, but did not make them ready for life when they graduated. Only 31% said their high schools did a good job in teaching them strong financial habits. 41% said their colleges did a good job in instilling those lessons and habits.