Bank of America/USA TODAY Better Money Habits Report Shows Student Debt/College Affordability Is Top Issue Among Young Voters in Bay Area
SAN FRANCISCO – A newly released Bank of America/USA TODAY Better Money Habits report finds that for 18- to 26-year olds in the San Francisco area, the definition of adulthood has changed: it is less about age and more about financial independence. In fact, the majority (75 percent) did not feel like adults when they turned 18. For a quarter, adulthood does not officially begin until at least age 25.
When asked to define adulthood, this age group, which includes the youngest millennials as well as the oldest members of Generation Z, responded with “financial independence” as the top answer. Additionally:
- Nearly half (48 percent) define adulthood as achieving a financial milestone such as buying a house or car, compared to having achieved traditional life milestones such as getting married/starting a family (6 percent) or graduating from high school/college (3 percent).
- For those who feel like adults, most say it’s because parents helped prepare them (55 percent), they have good role models (50 percent) or they have a job (44 percent).
- For those who do not feel like adults, 85 percent say it is because they still rely on their parents.
Many are still looking to their parents for financial support. More than half (58 percent) live at home with their parents, and just 33 percent pay their own cell phone bills. However, while about half (48 percent) are setting aside money for the future, 88 percent feel optimistic about their financial futures – a figure that is 18 percentage points higher than the national average. “It is great to see such a high level of optimism among young adults here, but their expectations for the future do not necessarily match up with the financial habits they are exhibiting now,” said Jason Ting, senior financial advisor at Merrill Lynch Wealth Management. “Half are not saving, and most are leaning on others for support. The importance of planning for the future – both the best and worst case scenario – is a critical financial lesson to learn early on.”
Nearly all wish they learned more about personal finance in school
While striving for financial independence, the majority of young adults living in the San Francisco area say they did not learn enough about practical money matters in school. Though their education has set them up for success in other ways, they are not necessarily feeling “life ready” upon graduating. Only 29 percent said their high school education did a good job teaching them strong financial habits. Of those who attended or are currently attending college, only 39 percent said their college education succeeded in imparting those lessons.
When asked what they wish they had learned more about in school, nearly all named a topic related to personal finance, more so than any other life-readiness skill:
- Forty-nine percent wish they had learned how to invest.
- Forty-two percent wish they had learned how to do taxes.
- Thirty-five percent wish they had learned how to manage monthly bills.
A lack of practical knowledge has left some graduates feeling less than prepared for the road ahead. Of those who attended or are attending college, roughly one in three (32 percent) has doubts about whether it prepared or is preparing them for the “real world.”
The need for additional support and resources is what inspired Bank of America to partner with Khan Academy to create Better Money Habits, a free educational resource aimed at empowering people to be more confident in their financial decision making. The site delivers easy-to-understand information on a wide range of personal finance topics from retirement and taxes to buying a home.
During the presidential election student debt/college affordability was the top concern
With roughly one in four (28 percent) saddled with student debt, young adults in the Bay Area approached the presidential election with that factor top of mind:
- Student debt/college affordability rose to the top as young voters’ top campaign issue.
- Among those with student debt, 84 percent say it will impact the way they vote.
- Still, two in five said they do not understand how the candidates’ policies would affect them financially.
Asked whether they prioritize economic or social issues at the polls, young voters in the San Francisco area were split, with 51 percent reporting that social issues are more important, while 49 percent prioritize economic issues. If forced to choose between two candidates – one who is best for their personal finances and one who is best for the country – the majority (85 percent) would prioritize what’s best for the country.
More info and free financial knowledge tools available at <https://www.bettermoneyhabits.com/index.html>.