Gone are the days where people manage their finances by simply pulling out a checkbook and making sure it balances to the penny. In order to truly manage one’s finances these days, you really need to understand bank fees, credit card terms, retail zero-down offers, insurance, leases, variable-rate mortgages, short-term loans, 401k plans, identity theft, flexible spending accounts, tax withholding, savings rates and a million other topics that we come across in our day-to-day lives.

How are we supposed to understand it all?

 

If you’re a Millennial with a prime credit score—700 or better—you are the least likely group to say you had to learn it on your own. If you are a non-prime Millennial, the opposite is true: you had to learn through trial and error.

 

While non-prime Millennials were more likely than other non-prime generations to cite a parent’s instruction, they were still 36% less likely to cite it than their prime counterparts. Half of them take matters into their own hands and turn to personal research.

 

Most striking about all the data is the utter informality of the learning. A parent’s example is hardly a recipe for understanding complex concepts, but at least learned wisdom (or cautionary tales) are embedded in the behavior.

 

The most common single source for learning about how to manage personal finances? “Trial and error.”

 

Older generations matured through the time of increasing complexity. They are more likely than Millennials to say that they learned how to manage their finances through trial and error. Still, 79% of non-prime Millennials said that it was one of the ways they learned. Prime Millennials were the least likely cohort to say that, with only 59%.

 

Is it any wonder that many people talk about making a lot of mistakes before they “grew up” or figured it out?

 

(n.b. "Subprime" is often used to represent people with scores below 640. People with 641 to 700 are sometimes called "near prime." We have elected to use the clearer designation of "non-prime" for all consumers with scores below 700.)