Most Young Adults Have Made Significant Financial Mistakes
The majority of young adults make crucial financial mistakes that could have a major impact on their lives, according to a study by Credit Karma. Many of these errors could have been avoided with proper financial education.
Credit Karma surveyed 1,051 Americans between the ages of 31 and 44 and looked at the data of its more than 45 million members. The study found:
• 68% of the respondents committed a “Credit Fumble” before turning 30, including overspending on credit cards, missing payments, having an account sent to collections or defaulting on a loan.
• 75% of those who did make a financial mistake before the age of 30 believed it had a negative impact on the quality of their life.
• Only 28% of the respondents received some type of personal finance education before college. 58% of those received the lessons from their parents.
• 73% of all respondents said a better financial education could have stopped them from making credit-related mistakes.
• When they received their first credit card, 69% of people did not know what a credit score was.
• “Credit Fumbles” make it difficult for people to improve their financial situations. 61% of the respondents were turned down for a credit card after earlier mistakes. 26% had to move back in with their parents to recover financially.
“Credit Karma’s Credit Fumble research quantifies a phenomenon that’s played out for too long in America, with young adults making unnecessary mistakes without the right financial education that have a big impact on their lives,” said Credit Karma CEO and Founder Kenneth Lin. “These early mistakes can have a lingering impact on the quality of people’s lives and we feel that with better, targeted education and learning tools for new-to-credit consumers, this cycle can be broken.”