When it comes to money, millennials are less than confident about the markets, says Kristi Mitchem, Wells Fargo Asset Management CEO.
A study the bank recently commissioned on millennials and money found that 20 percent of young people said they will “never” be invested in the markets while 53 percent said they will “never be comfortable investing in the markets.”
The bank surveyed more than 1,700 individuals between the ages of 20 and 36 to gauge their financial literacy and their relationship with money and their opinions about the markets.
“I think that lack of confidence is something that we really need to find a way to work through with them. If they continue at this rate, they will never have enough savings for retirement. Ever,” Mitchem said on CNBC’s “Power Lunch.”
“Helping them think through these issues and really understand how important it is to not just to save, but invest I think is critical,” she said.
With average student debt now $34,144, up 62 percent over the last 10 years, it’s not hard to accept that millennials aren’t feeling great about their finances. But for the sake of their future happiness, Mitchem said it’s time to get over the anxiety.
Wells Fargo came up with a Positive Financial Indicator (PFI) to test how well an individual is doing financially. It consists of five attributes of an individual in good financial standing:
- I have enough money to be able to save for future needs.
- I am saving enough for retirement.
- I feel in control of my financial life.
- I take an active role in setting and achieving goals.
- I am able to pay for monthly expenses.
Interestingly, the bank found that those who score higher on the PFI tend to be happier and more confident with their money.
“So really, really important — engagement actually drives happiness. And that’s a connection, that millennials don’t understand. They would tell you that happiness is all about relationships, they assume materiality, but actually, finances do matter to them,” said Mitchem.
“Activism actually creates more confidence. Grandparents who have millennial grandchildren, parents who have millennial children, talk to your millennials about money and finance. Don’t give them fish, don’t teach them how to fish, fish with them,” she said.