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Financial Literacy for Millennials

Written by
Samantha Rose
Samantha Rose is a personal finance writer covering financial literacy for OppU. Her work focuses on providing hands-on resources for high school and college-age students in addition to their parents and educators.
Read time: 8 min
Updated on July 31, 2023
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Millennials face unique financial challenges as they settle into adult life.

As a generation, millennials are straddling the line of adulthood. Some are 20-somethings just beginning to experience real-world finances on their own. Others are 30-somethings who are already there: settling into careers, buying homes, and saving for retirement.

This period of life is accompanied by a series of money-related milestones. And while everyone's situation is unique, many millennials face three common financial challenges: debt (primarily student loans and credit card debt), housing (including preparation for home purchases), and career planning.

So how can millennials avoid financial missteps as they learn to navigate adulthood? Here are the core financial literacy skills that will set them on the course to healthy financial futures.

1. Debt

What do millennials need to know?

  • Credit and student loan options.
  • Repayment options.
  • Payment amounts and due dates.
  • Interest rates for loans and credit cards.

What do millennials need to do?

  • Take advantage of student loan exit counseling if provided.
  • Choose a repayment plan.
  • Sign up for automatic payments.
  • Create a debt payoff plan.

The challenge

One of the greatest challenges that millennials face is a national debt crisis, comprised mostly of student loans and mismanaged credit cards. College costs are steadily increasing while wages continue to stagnate. This tension has taken a toll, but luckily, there are ways that millennials can counteract it.

Research student loan options

Caleb Backe, a health and wellness expert for Maple Holistics, recommends a preventative approach to student loans. First, millennials need to be diligent in exploring their options.

“They need to do research on how their field views degrees from universities of different calibers in order to determine if taking out those student loans is truly worth it,” he said, adding that it may be “better to attend a less expensive school.”

Backe also stressed the importance of thoroughly researching scholarship opportunities, “as these can greatly offset the costs of getting a quality education.”

Develop a repayment plan

For most millennials, taking on some amount of debt is inevitable. In this case, it’s critical to stay organized with a repayment plan. Millennials should know their student loan servicer or their credit provider, as well as the repayment terms they’ve agreed to. If at any time their payments become unmanageable, they should work to renegotiate terms to better suit their ability to pay back the debt. Signing up for automatic payments is a great trick to avoid falling behind.

Get serious about debt

Finally, Backe stressed the importance of aggressively paying down debt. The longer that loans are outstanding, the more they will cost because of the additional interest the borrower will pay.

“...millennials should be aware of the fact that interest accumulates rather quickly, so it’s best to pay them back as speedily as possible,” he said.

How to pay off debt

Need a few more tips for becoming debt free? Conor Richardson, author of "The Millennial Money Makeover: Escape Debt, Save for the Future, and Live the Rich Life Now," suggests developing a debt-free timeline.

“Write your goal down and post it in a prominent place,” he said. “Refer to it regularly. Whether you want to pay off all of your debt in one or five years, you must have a plan and a debt-free date.”

Committing to a debt-free date is crucial, he said, and to pay off debt, Richardson explained how he favors the “snowball method” of prioritizing payments, which targets the student loan or credit card with the smallest balance.

“This generates momentum and small psychological wins, which propels you toward success,” he said.

While debt may feel overwhelming for many millennials, establishing goals and developing a plan to meet them will provide returns down the road.

“Eliminating all of your debt should be the primary goal of your 20s and 30s,” Richardson said. “A debt-free future cements your financial foundation.”

2. Housing

What do millennials need to know?

  • The price-to-rent ratio of where they live.

What do millennials need to do?

  • Use a rent or mortgage calculator to determine their budget.
  • Find an apartment or house through a trusted site or real estate agent.
  • Save at least 10 percent down or, ideally, 20 percent, if they want to purchase.

The challenge

Homeownership may seem like a distant dream for many millennials, but it doesn’t have to be. The key is knowing whether renting or buying a home makes sense and how to allocate finances to reach that goal.

Rent or buy

The decision about whether to rent or own a property depends on a number of factors, including but not limited to income, debt, credit score and history, and job stability, said Daniela Andreevska, the marketing director at Mashvisor.

“Most of these are very personal and subjective, but there is one very objective factor which millennials should look at—the price-to-rent ratio in the housing market where they live,” she said.

Essentially, the ratio estimates whether it’s cheaper to rent or own a property in a given area.

“A high price-to-rent ratio—21 or above—means that in this particular market it makes more financial sense to rent rather than to buy as properties are too expensive compared to rents,” Andreevska explained. “In a market with a price-to-rent ratio between 16 and 20, it usually is better to rent.”

But some markets are ripe for homeownership.

“If the price to rent ratio is low—15 or below—it makes perfect sense to buy a home as renting is relatively more expensive,” she said.

Keep housing costs manageable

If you decide to rent, make sure to keep your rent payments below 30 percent of your income—a hard task for those in high-price cities. Even then, spending more on rent is manageable, so long as the rest of your budget stays lean. Figure out what your ideal budget is with a rent calculator.

For millennials ready to buy, try to save the recommended 20 percent down for a mortgage in addition to any moving, renovation, furniture, or emergency costs that might arise. Homeownership is a huge, exciting milestone, but one that requires careful planning.

3. Careers

What do millennials need to know?

  • The pros and cons of a traditional career versus starting their own business.

What do millennials need to do?

  • Explore job benefits, especially retirement plans.
  • Align their lifestyle to their salary.
  • Determine their aversion to risk.
  • Consider starting a side hustle if they're interested in entrepreneurship.

The challenge

Many millennials have been told that by attending a good college they’re guaranteed a well-paying job complete with benefits, stability, and an easy route to retirement. Some might argue that this is no longer the case—the average millennial is balancing student loan debt, multiple jobs, and rising housing costs.

While many things about the job market have changed, careers that provide a stable paycheck and the security of benefits are still available. But in the age of startups and innovation, some millennials might feel called to strike out on their own.

The 9 to 5

A full-time, salaried job may be viewed as an outdated concept, but traditional careers still exist and are a good option for many millennials.

The types of jobs available have changed, however, in addition to how millennials perceive and pursue career growth. In the last decade, a boom in industries such as tech and renewable energy have enticed a number of recent grads to these fields. Frequently, employers tout competitive salaries, full benefits, and a range of employee perks—dog-friendly offices and unlimited vacation days, to name a few. Millennials should explore and take advantage of all benefits available to them, especially company-sponsored retirement plans.

Career advancement looks a lot different for millennials than for older generations who were content to begin and end their careers at a single company. Younger people tend to be less complacent and are more inclined to pursue job-hopping and lateral promotions to further their professional learning. Millennials should research career options and work to build skills and experience. Most importantly, they should align their lifestyle to their salary and commit to a budget that ensures they spend within their means.

It’s not hard to see why some millennials opt for a career with a solid salary and benefits package. The sense of security and reduction of financial anxiety alone may be well worth it.

Is entrepreneurship a smart option?

A recent study concluded that millennial entrepreneurship rates are significantly lower than other age groups. Even when the relative youth of millennials is accounted for, the rates are still low. For a number of reasons, this makes sense.

“Due to student loans, credit card debt, and expensive housing, most millennials prefer the security of a full-time job versus the risks of entrepreneurship,” explained the study’s author, Priyanka Prakash, a lending and credit expert at Fundera.

Growing up during the Great Recession also contributed to risk aversion among millennials, she said. Further, millennials typically don’t have the extra assets to invest in a business.

How to start a business

What’s the solution, then, if you’re a millennial ready to step out on your own but you fear the uncertainty of an irregular paycheck and loss of benefits? Keep your day job and begin with a side hustle.

“If you're a millennial who is interested in business ownership but money is holding you back, I would recommend starting small,” Prakash said. “Start an Etsy shop or an Amazon shop, or start freelancing. Once you have a few steady clients, you'll have enough revenue to grow your business slightly larger.”

When millennials feel ready to commit, exploring financing options may be worthwhile—but only if done right.

“[I]f you’re smart about debt, you can also take on a small loan to help you achieve your entrepreneurship goals,” said Prakash. “Just make sure that the loan commitment makes sense, given your business' revenue, profits, and growth potential.”

Article contributors

Daniela Andreevska is the marketing director at Mashvisor, a real estate data analytics company which helps investors find lucrative traditional and Airbnb rental properties in the U.S. housing market. She has been writing about real estate investing for a few years, prior to which she worked in economic policy research and fundraising. Daniela holds a master's degree in Middle East and Mediterranean studies from King's College London. You can find her on Facebook at @Mashvisor.

Caleb Back

Caleb Backe (MBA) provides expert services and consultancy in new-age business strategy and cutting-edge wellness. A personal trainer, life coach, and marketing director for Maple Holistics, Backe synergizes the best of business and wellness to the benefit of clients and businesses across the globe. You can find him on Facebook at @MapleHolistics.

Priyanka Prakash is a lending and credit expert at Fundera, a marketplace for small business financial solutions. She helps small business owners understand their financial position and achieve their financial goals. Prakash has been working with small businesses for five years and is also a licensed attorney who served as general counsel at a Y Combinator startup. Her writing has been featured in Inc., CNBC, Fast Company, and other top publications. You can find her on Facebook at @Fundera.

Conor Richardson

Conor Richardson, CPA, is the founder of, where he helps millennials master essential money matters. Richardson began his career in New York City, working in finance and accounting and running his own businesses. His business experience ranges from working with early-stage startups to publicly traded companies. He has been featured in Fox Business, The Washington Post, and more. Richardson received his Bachelor of Business Administration in accounting from the University of Georgia and earned a Master of Accounting and Professional Consultancy from Villanova University. He currently lives in Austin, Texas. You can find him on Facebook at @MillennialMoneyMakeover.

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