Just last month, research showed helicopter parents are screwing up their kids no matter how loving they may be. Now according to Forbes, FINRA's recent report gives helicoptering another reason to land and stay grounded: Millennials rank lowest in financial literacy compared to previous generations.
Only 24 percent of millennial respondents, born between 1978 to 1994, answered four or five out of five of FINRA's financial literacy quiz questions accurately. The generation is struggling financially and expressing concerns about their debt (which is no surprise when there's a lack of financial knowledge to make well-informed decisions).
"An engaged parent teaches kids to make their own decisions and trains them for everyday life, and that includes financial decisions and responsibility," Dr. Chester Goad, a university administrator and member of the Editorial Review Board for the Journal of Postsecondary Education and Disability, told Forbes. "It's the tethered parent who neglects teaching those things and then intervenes, or makes those decisions for [their children], who can become problematic."
For example, parents who take out a personal loan for their college-bound kids can prevent them from understanding financial repercussions of major life choices. Or parents might not educate them about credit card practices: 34 percent of millennial participants engaged in at least three costly credit card behaviors over the period of a year. Some even keep their kids financially dependent: 44 percent of parents give "frequent support when needed" or "regular support for living expenses" to their 18- to 29-year-old children.
As the FINRA report points out, millennials are faced with a much different America than the one previous generations have faced, especially when you consider the large increases in higher education cost, the Great Recession that happened early in their careers,and the financial challenges of a struggling post-recession economy.
But the current climate is also what makes the takeaway so much more important: Millennials (who make up a third of the population) need to start making their own financial choices and understand the consequences when they're young. That means it's up to the parents to intervene as minimally as possible.