Millennials Financial Independence

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Overview: Financial Independence, Millennial Perspective

Financial independence is a high priority for Millennials. To determine how Millennials define financial independence, we focused our research on surveys and articles that provided direct feedback from this generation. Below you will find the results of our research.


When Millennials between the ages of 18–26 years old were asked to define what adulthood meant to them, 40% of those surveyed indicated that financial independence was their top priority. According to Kate Asson, a Millennial who teaches personal finance courses, she views financial independence as “being fully self-reliant. The income you use to meet your expenses is driven by you and you alone.”

Another survey conducted on Millennials' views around when people should be able to pay their own bills yielded the following benchmarks:
----"A majority of millennials think they should be expected to pay for their own housing at age 22,
----Pay for their own car at age 20 ½
----Pay their own cell phone bill at age 18 ½."

Interestingly, a Merrill Lynch survey with Millennials indicated that only 14% viewed moving out as their top priority. Other general market research found that Millennials were more likely to live at home, with the US Census data placing this percentage around 40% (including those living in college dorms). This appears to indicate that living arrangements may be considered a vehicle to reach financial independence by Millennials.

A majority of our research indicated that Millennials strongly consider being debt-free and maintaining a savings accounts in their pursuit of financial independence. Less emphasis was placed on "moving out" as a means to obtaining financial independence. These factors have been broken down in greater detail below.


Given rising housing costs, lower wages, and high student loan debt balances, Millennials appear to place a higher emphasis on becoming debt-free as a means to pursue financial independence. This comes from their focus on paying down debt and finding other means to leverage expenses.

Paying Down Bills / Sharing Expenses:
For example, Alison Luhrs, a 28-year-old Millennial, claims that she'll be “debt-free in six months.” Luhrs continues to add that she’s been paying off her own debt for years and adds that “the only bills I share are a phone plan with my family and a Netflix account with my ex (he pays for Netflix, I pay for Hulu, we share passwords and separate viewer tabs).”

A 2016 study conducted by Fidelity found that almost half of Millennials get financial assistance from their parents in the form of help on phone bills and clothing. With shared family phone plans and shared online accounts, this type of financial assistance is becoming more acceptable as they offer both convenience and savings.

According to an informal survey of Millennials (primarily around the age of 30) conducted by Hanna Brooks Olsen, she found that "most pay their own rent or mortgage, though they do tend to share small accounts between friends or family regardless of age."

Living At Home

Many Millennials have arrangements with their parents to live at home as a means to obtain financial independence. The PEW Research Center found that 15% of Millennials between the ages of 25 and 35 lived with their parents in 2016, which was twice as many as those living at home in 1964. The US Census Data places this closer to 40%, including those living in college dorms. This appears to be supported by surveys with Millennials that indicate only 14% view moving out as their top priority.

Millennials, such as Jessica Bergman, a 25-year-old college graduate, often have agreements with their parents to remain at home to pay down their debt and eventually be independent. Bergman claims that “I lived at home and worked for two full years to pay back my loans before I moved out on my own.”

Overall Financial Position

Finally, Millennials attitudes toward overall financial position indicate that:
---- 8 out of 10 Millennials keep a budget, as compared to 61% of Baby Boomers.
----They are less inclined to open credit cards accounts than their parents.
----They are concerned about their credit scores and how they are determined.

Based on the above, it appears that acceptance of some form of financial support from family members does not impact the Millennials' view of financial independence.


Research indicates that Millennials view maintaining savings accounts as a step toward their financial independence. This may arise from fears of a future recession. Notable statistics include:
----A survey conducted by Fidelity indicated that 85% of Millennials maintain some form of savings.
----A Merrill Lynch survey of 1,010 Millennials found that 66% of Millennials surveyed plan to rely on their savings accounts to help with expenses over the next 20 years.
----Millennials were also more inclined to have an emergency fund than their parents.


Overall, financial independence appears to be a high priority with Millennials. They place the highest priority on becoming debt-free and maintaining a savings account toward their quest for financial independence. Many will accept various forms of financial support from their parents in the overall pursuit of financial independence.
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Overview: Financial Independence, Industry Perspective

This response focuses on identifying the financial services' industry perspective and definition of financial independence for millennials. While there is no unifying definition of what financial independence for millennials means to financial service experts, they all revolve around the idea that they should save enough money for retirement spending. It also means solving the biggest obstacles that millennials face in achieving financial independence including paying off student debt in a more globally competitive job market. You will find a deep dive of my research findings, as well as how I came to this conclusion.


In order for us to understand financial independence for millennials, we must identify how financial service experts define this theme. There are three main sections in this research. In the first section, "STUDENT DEBT," I discuss how financial service experts define financial independence for millennials as being able to pay off student debt. In the second section, "SAVINGS," I describe how financial services experts see financial independence for millennials as having money left over after expenses and saving in order to have money for retirement. Finally, the third section, "LABOR MARKET," I explain how financial service experts see financial independence for millennials as someone being able to compete in today's globally competitive job market.


According to financial service experts, one of the things that helps to define financial independence for millennials is paying off student debt. The reason is that millennials can be paying interest on their student debt without realizing that they have the option to pay their student debt with an income-based repayment plan. The income-based repayment plan allows for student loans to be paid off according to the borrower's income level. If a millennial has a low income, they would be able to pay less for the student debt that they have and have money left over to save for retirement.


In addition, financial service experts define savings as important to financial independence for millennials. This means that the millennial must start saving for retirement by the age of 25. When they do, they must take a portion of the income they have in order to retire with enough money.
This means making a budget in order for the millennial to limit spending on the things that are not necessary. Another important step for increasing savings for millennials is delaying luxury by not overspending on unnecessary goods in order to have money to pay back student debt. When paying off student debt, millennials should use the income-based repayment program instead of just writing a check so that there could be more money allocated to savings if the income-based repayment option lowers the amount of money they have to pay at a monthly basis. When paying for an item the millennial should use cash instead of credit cards in order to avoid putting themselves into additional debt which decreases there ability to achieve financial independence. Finally, millennials should find out if their employer offers a match of 401(k) contributions and contribute at least up to the match.


Finally, financial services experts view financial independence for millennials as being able to maintain a job in a more globally competitive labor market. Even then, below-trend wage growth is still a problem because this means that wages are not growing as fast as inflation. This means that the cost of living becomes expensive as millennials have less of an ability to set aside money to achieve financial independence.
In addition, it is important for the millennials to find their calling. This is important because being able to finally know what one's calling is can increase their income simply due to having more natural, inspired passion about one's work. This may increase the optimal level of performance and therefore potentially increase earnings.


In conclusion, financial service experts do have some similar ideas to what financial independence means for millennials. This will become a growing topic as we face a continuation of the lingering after-effects of the 2008 financial crises. This includes a more globally competitive job market with below-trend growth which creates less money for millennials to save and achieve financial independence and continued fiscal pressures that are creating growing calls for the federal government to decrease spending on social security.
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Overview: Impact of Delayed Financial Independence.

In a recent survey, 40% of millenials reported that attaining financial independence was their top priority in becoming an adult, making it the most popular priority among that generation. However, despite these aspirations, more young people are living with their parents than at any time in recent years, and even more are letting their parents pay for some of their expenses. In 1960, fewer than one in six 25 year olds still lived at home, now about one in three do. Moreover, a remarkable 47% of millenials have let their parents cover some of their financial expenses. This has an enormous impact on the financial and personal lives of all those additional young people living with or relying on their parents, both positive and negative. On the one hand, living at home gives many young people the opportunity to save and better financially prepare for their future, but on the other hand it can make it harder for them to learn how to live independently. In this report I'll first look at the causes of this phenomenon of delayed financial independence, and then on its financial impacts, and then its emotional or personal impacts.


There are three main reasons more young people are living at home for longer - demographic trends, higher student debts, and higher rents.

The most important demographic trend driving decreased financial indepdendence is delayed marriage. While in 1970 49% of 18-34 year olds were married with kids, today it's just 20%. That means there's less need for young people to have a place of their own - living with your parents is a lot easier if it's just you than if you have to find space for your spouse and children as well. It might be tempting to imagine that the casuation runs the other way - maybe decreased financial independence is causing young people to get married later. But in fact, as Jed Kolko, an economist and contributor to FiveThirtyEight, writes, "the decline in young adults being married with kids long pre-dates the recession and the rise in living with parents, and has been relatively steady for decades [...] That means marrying later is not the effect of the post-2005 increase in living with parents."

The second major reason more young people are delaying their financial independence is due to increased rates of student debt. Forbes notes that the average debt for a college student who graduated in 2016 is $37,172 and total student debt has now reached $1.3 Trillion. This is a substantial increase even from recent years - the average debt of a graduate in 2004 was just $18,550. So many students graduating with extremely high debt makes it harder for them to be financially independent at an early age.

Finally, the third main reason so many young people are experiencing delayed financial independence is historically high rents. Median rental prices in the US have increased 18% over the last five years, and have doubled over the last twenty years. This makes it harder for young people to pay their own rent, in turn forcing them to move back in with their parents. Now that we understand why so many more young people are remaining financially reliant on their parents, let's look at the effects that's having.

Financial Impacts

Predictably enough, relying on their parents for some or most of their expenses has improved the short term finances of millenials. While little research has been done on the direct causality of such arrangements, the proof of the pudding is in the eating. Fidelity reports that millenials have an average of $9,100 saved for emergencies, more than the $8,700 saved by Gen X-ers, and much more than the $7,100 saved on average by Baby Boomers. Greg McBride links this trend to millenials accepting decreased financial independence in the short term: "Millennials have a greater inclination towards saving than their predecessors, and it’s easier to save when you’re living at home than it is when you’re out on your own [...] Those years at home help establish a solid financial foundation so that they’re in a better position when they do move out.” Nancy Worth, an assistant professor at the University of Waterloo studied young adults who have moved back in with their parents in the Toronto region, and found that contrary to what many people think, "The people I spoke with were strategically making that choice for six months, a year, two years to save for a down payment, to save money or pay off debt to then be able to get way ahead of their peers." As a result, she felt that, "If anything, my study shows people choosing to move home are actually making a smart choice to save up and get ready for the future.”

That smart planning is reflected in millenial budgeting as well, since millenials are actually better at budgeting than their parents or grandparents. TD Ameritrade compared the financial habits of 1,038 boomers and 1,062 millenials, and found that millenials are much more likely to both budget and save their money. Specifically, they found that while 77% of millenials have a budget they follow some, most, or all of the time, only 58% of boomers could say the same. Even more strikingly, while 38% of boomers reported having no budget at all, compared to only 17% of millenials.

A report from Bank of America Merill Lynch suggests that coming of age during the recession may also have influenced millenial saving habits. A striking 38% of millenials report being willing to save more than half of their paycheck if necessary in order to have money later on, and 85% report playing it safe with their immediate finances. Moreover, contrary to the belief that delayed financial independence makes millenials less responsible with their finances 54% reported being willing to cut back on going out, and 42% would skip a vacation in order to save, and 36% and 33% respectively reported being willing to delay buying a house and starting a family in order to save for the future.

However, their stated willingness to cut back may not reflect reality. Millenials report being much more likely than previous generations to spend money on non-essential items or experiences. 53% of millenials spend money on taxis or Ubers, compared to 29% of Gen X-ers and 15% of boomers. According to the same report millenials are similarly much more likely than previous generations to spend money on coffee that costs more than $4, the latest electronic gadget, clothes that "I don't necessarily need", eating at "one of the hot restaurants in town", and going to see live music or sports events.
The more long term financial effects of this trend are not yet fully known, as by definition those participating in it are still young, however despite their slightly more profligate spending habits, millenials are able to save more than their parents while paying down their debt, and that can only be a good thing for their long term financial health.

Emotional Impacts

Less research has been done into the emotional or psychological effects of delayed financial independence than the economic ones, and the results that are available are far from conclusive with regard to the health of the millenials. Surprisingly, the effects on parents health are far clearer - and clearly good! Emilie Courtin of the London School of Economics studied 50,000 people over the age of fifty, and reports, "we found that the effect of intergenerational residence is actually really good for older people". In fact, living with one's children decreased self-reported depression by half a point on a 12 point scale. That may not sound like much, but as Courtin points out, "The effect is bigger than that of education or daily activities".

Nicole Farris at the University of West Alabama has been trying to study the psychological effects on the millenials of moving back home, however her summation of her findings serves as a good summation of all the research done on this topic: "It’s tough to tell whether [moving back home] is good or bad for their mental health." A large part of the mix comes down to whether the move home is forced by their financial circumstances, or an active decision to save on housing expenses so as to pay down debt or save for future housing or educational expenses.

However, one potential negative effect that many people might expect does not seem to have occurred - strained relations between parents and children. On the contrary, millenials have closer relationships with their parents than any recent generation. Bella DePaulo reports that far more children and parents report simply liking each other than has been the case in the past, with her research showing that three-quarters of parents saying that they had a mostly positive relationship with their adult children, and only 2% reporting a mostly negative relationship.


While many people claim that delayed financial independence harms the financial habits and psychological independence of millenials, the actual evidence is more mixed. Unfortunately, there do not seem to have been any studies in to the direct causal links between delaying financial independence and long term financial outcomes, perhaps because most of the people affected by this trend are still young. However, we can begin to get an idea by looking at the varying habits of millenials and their parents to see how the changing financial culture is affecting them. Millenials do tend to spend more freely than previous generation on non-essential items, however they also save more, and have planned more for the future. For many, moving back in with their parents is a prudent decision which allows them to save and pay down debt, while setting up their careers.
On the emotional or psychological side, the results are mixed for the millenials themseves but decidedly beneficial for their parents, who benefit from closer relationships and decreased loneliness when living with adult children.

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Overview: Millennials and Financial Advice

Known as "digital natives," meaning people who were brought up with computers, the Internet, and cell phones in the home, millennials generally lack conformity to traditional business norms. Through smartphones and other mobile devices, information about finance can be accessed with the click of a button. Below, I discuss my findings about where millennials go for financial advice.

Bank of America categorizes millenials into three subsets, and explains who each subset turns to for financial information. The Younger Millennials are 18-22 years old, and they "get their financial information from their parents and from their coursework at school." The Middle Millennials are 23-29 years old, and they are "more likely than younger Millennials to turn to a professional advisor or their employer." The Older Millennials are 30-34 years old, and "aside from their parents, they turn to professional advisors, employers and books for financial information."

Entrepreneur cites a Harvard study which found that only 11% of millennials trust Wall Street. Further, millennials are twice as likely to turn to their parents for financial advice over professional advisors. Deloitte touches on this lack of trust by stating that 84% of millennials seek financial advice from advisors, despite the skepticism they have about them. The financial crisis and volatility in financial markets caused millennials to be reluctanct to follow generations before them when it comes to seeking professional financial advice. Also, U.S. News states in an article that "millennials are the generation least likely to seek professional guidance with their investments."
Professional financial advice is neglected to this extent because, in this day and age, people are able to access copious information from mobile devices that professional advisors once provided. According to "The Advisor of the Future," a 2015 report by Hearsay Social, the new client expects "24/7 access to information that is readily available via a smartphone, tablet or computer."

Because millennials make heavy use of technological advances, "they consider technology and online platforms an important aspect of financial advice." The way millennials want to receive financial advice is the key difference, especially when compared to their older counterparts. They want digital touch-points instead of having to turn to humans, and so their focus has shifted towards financial technology (FinTech) companies for financial activities.

Furthermore, page 255 of "Financial Behavior: Players, Services, Products, and Markets" mentiones that "young adults express the most interest in the prospect of reading financial blogs posted by financial or investment firms, preferably on the websites of major financial media outlets."

Millenials avoid seeking advice from professional advisors, and they are currently a financially underserved demographic. Thus, millennials often lack the foundational knowledge needed to make sound financial decisions. InvestmentNews found from J.D. Power Studies' US Full Service Investor Satisfaction Study that "while affluent millennials still represent just 8% of the overall available investable asset pool, they represent 55% of assets held by investors who are currently at risk of leaving their current investment firm."

Having said that, millennials will become the most important financial generation in the US by 2038. So, banks would need to invest in digital capabilities to better serve the these digital natives when it comes to financial advice.

Although I was unable to find very recent studies (e.g. within the last 2 years), I found the USA Today/Bank of America Better Money Habits study, done in 2015, to bear relevance to where millenials are mostly to go for financial advice. It included a survey of 1,000 adults aged 18-24 years old and revealed the following people/institutions that they turn to for financial advice.

Parents - 62%
Friends - 29%
Other family - 28%
School - 27%
Local banks - 13%
Financial websites - 12%


As the studies in this report do differ, exact statistics could not be determined. However, the insights in these reports as well as the articles reveal the similar answers. Millennials have a higher tendency to turn to their parents for financial advice, and many are skeptical of financial institutions due to either poor role models or because of the financial crisis in 2008. They prefer an experience with digital touchpoints over a sit-down experience with professional advisors, and although this has caused them to be the undeserved demographic amidst their older counterparts, they are expected to become the most important financial generation in America by 2038.
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Overview: Millennials and Financial Support


Nearly half (roughly 47%) of Millennials receive financial assistance from their parents in some form. In general, Millennials receive financial assistance in order to pay for their rent or housing, their tuition for school, their own children, cell phone plans, and other expenses. The average amount of financial assistance received by Millennials between the ages of 22 and 24 from their parents per month is $3,000. Studies found generally define Millennials as being between the ages of 18 and 34; information for adults over the age of 35 who were also described as Millennials was not readily available. Additionally, there was little data available that consistently broke down Millennials as a group into smaller age brackets; use of the word Millennials without indicating a specific age bracket should be presumed to mean all of those aged 18-34. Certain older studies do break down Millennials into two age brackets — ages 18-25 and 26-34 — but there was not enough consistent, recent information available to support the use of these figures throughout this report. Additionally, it was oftentimes not possible to find exact averages for the amount parents were helping their children pay; these figures are provided where available.

Housing and Utilities

In 2017, it was reported that 19.6% of men and 12.5% of women between the ages of 24 and 35 live with their parents. Of Millennials between the ages of 22 and 24 who do not live with their parents, nearly 40% report receiving assistance from their parents in paying the rent on their own dwellings. Millennials in this group reported receiving around $250 per month from their parents in assistance, but it was not indicated how much of this assistance was contributed to rent. Among Millennials who are taking the plunge and purchasing their own homes for the first time, nearly 13% receive financial assistance from their parents in this endeavor (additionally, this number is expected to increase from 13% to 17% in the next five years). This assistance comes in the form of contributing an undisclosed amount to down payments (50%), closing costs (20%), and co-signing on loans (20%).

Additionally, roughly 20% of parents report helping pay for their Millennial children's utilities. Furthermore, affluent Millennials who were surveyed report that 23% of their parents provide assistance with utility payments. Approximate figures for how much money these utility payments consist of was unavailable.

Education and Student Loans

Because the cost of education is steadily increasing, Millennial children are leaning heavily on their parents for assistance paying for tuition and student loans. In 2015-2016, it was reported that parents, on average, assisted their children's tuition payment by paying around $27,000. Compared to data from a decade ago, when around 35% of young adults between the ages of 19-22 reported receiving an average of $10,000 from their parents to help pay tuition, this expenditure has more than doubled. As far as other educational expenses go, 20% of parents report assisting their adult children in paying for student loans. No specific figures were provided for how much parents contributed to student loan payments, but it is notable that on average, student loan debt amounts to more than $37,000 on an individual basis.

Millennials with Children

A unique subset of data about parents paying expenses for their adult children involves assisting in expenses related to their grandchildren. Millennials who are parents receive a little more financial assistance than their childless counterparts. Parents of Millennials with children report that they assist their children and grandchildren financially with around $4,500 per year on average. Notably, Millennials with children claim they receive around $2,000 less than what their own parents report, and with the inclusion of unpaid labor receive a combined $11,000 from their parents in assistance raising their children.

Other Expenses

There are several other categories in which Millennials receive financial assistance from their parents. One of the most popular expenditures that Millennials received parental assistance for was cell phone plans; many Millennials stay on their parents' cell phone plans because it saves money for both sides in the long run. It can cost between $20 and $30 more for someone to go solo on a cell phone plan than it does to piggyback on a family plan. Sixteen percent of parents help their Millennial children pay for their credit cards; additionally, parents report assisting their Millennial children in paying for at least 50% of their weddings, which can average around $33,000 (and vary by region). Thirty-six percent of parents report helping their children pay for transportation, while 17% contribute to medical debt expenses.


Almost half of Millennials receive financial support from their parents in some form. Much of this assistance comes from contributing to rent or housing, education, their own children's expenses, and a variety of others. Finding information that broke down Millennials (who are typically defined as people between the ages of 18 and 34) into specific, consistent age brackets was not possible, and additionally, it was rare to find exact figures regarding how much, on average, parents help their children pay for certain things. Millennials between the ages of 22 and 24 report receiving around $3000 per year in support from their parents.
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Overview: Millennials and First Financial Account

Efforts to identify the age of when millennials in the US first receive a financial account from their parents prove that such information is largely unavailable. However, exhaustive research has allowed us to determine that this age may be getting younger and younger caused by financial independence becoming harder to attain at young ages.

Due to the scarcity of information available within public domains and the nature of this request—which requires us to provide information about events that may have happened more than 24 months ago—we have decided to extend the scope of our research to include sources which cover these dates.


USA Today and the Bank of America conducted a survey about money habits covering 1,000 millennials and 1,005 parents back in 2015. Findings from the survey indicate that the age millennials are achieving financial independence from their parents is rising. Data shows that only 12 percent of parents received financial assistance from their own parents when they were starting out. For millennials, this figure climbs to 36 percent. Findings also indicate that 40 percent of millennials aged 18-25, and 22 percent of those aged 26-34, still receive financial assistance from their parents.

30 percent of parents who provided financial assistance said that they only chose to help because they knew that their children truly needed help. 23 percent stated that they feel it is their obligation to help their children as their parents.

According to finance expert Lynnette Khalfani-Cox, millennials are "dealing with a lot of financial factors that their parents, and certainly adults in America, did not have to contend with a generation or two ago."

Findings from the 2016 Experian College Graduate Survey show that as much as 15 percent of college students today have their parents pay for all their bills.


The New York Times recently published a survey about the finances of millennials in their early 20s. According to findings from the survey, millennials aged 22-24 received financial assistance from their parents worth an average of $3,000 a year.

Data shows that the amount they receive varies depending on their career choice. Millennials with careers in art and design received an average of $3,600 annually. This figure drops to $3,500 for those with careers in professional services, $3,300 for both health and computer sciences, $3,000 for education and social work, $2,200 for personal services, and $1,400 for blue collar and military work.

The survey found that 53 percent of millennials with careers in art and design received parental support. This figure drops to 47 percent for those with careers in science, technology, engineering, and math (STEM). This percentage drops further to 45 percent for those with careers in education and social work, 39 percent for professional services, 37 percent for health, 30 percent for blue-collar and military, and 29 percent for personal services.


The Bank of America recently published findings from their 2016 Young Americans and Money survey. According to the survey, younger millennials are a lot more dependent on others when it comes to managing their finances. This is evident in the data showing that more millennials aged 22-26 years old contribute to a 401(k), do their own taxes, own or lease their own car and house, pay for their own bills, and have their own insurance compared to their 18-21 year old counterparts.

The survey by the Bank of America also shows that female millennials are more financially independent than their male counterparts. This is evident in the data showing that 61 percent of female millennials have set aside savings compared to only 55 percent of male millennials. This trend is consistent when it comes to doing their own taxes (34:28), having their own health insurance plan (33:25), and paying their own rent (38:32).


T. Rowe Price is a leading US-based finance company. According to a 2017 survey they conducted, 18 percent of children aged 8-14 now have credit cards from their parents. Back in 2012, only 4 percent of children within this age bracket had credit cards. 19 percent of children aged 13-14 have already been given credit cards. Back in 2016, only 9 percent of children within this age bracket were given credit cards. Former senior financial planner Stuart Ritter states that this trend is primarily driven by the growing need in today's digital space-dominated world for kids to be educated more about how credit works and less about how cash works. Marketing professor Audrey Guskey anticipates that this trend will continue to grow, leading to a lower average age for kids receiving credit cards from their parents. Guskey also states that just how cellphones are now considered a norm for young kids, parents giving children credit cards will also become a common thing in the near future.


Findings indicate that the number of college students with credit cards under their own name is dropping greatly while the number of those with credit cards from their parents is rising. According to a survey by Student Monitor, 23 percent of college students in 2015 had credit cards under their own name. This is significantly lower compared to back in 2005 where 46 percent of college students had credit cards under their own name.


Although this request specifically asks not to focus on the age of millennials when they first get their own credit card, we found that majority (47 percent) do so at the age of 21. Sources also indicate that more millennials in urban areas get credit cards compared to those from rural areas.


Millennials and children are receiving financial accounts from their parents at a younger age today than they have been few years ago.