millennials and their moneyMillennials are overconfident and underprepared when it comes to managing their money, according to new research from the National Endowment for Financial Education (NEFE) and George Washington University. Only 24 percent of respondents in the study showed basic financial literacy, with just 8 percent showing a high level of knowledge. Yet, 69 percent gave themselves a high self-assessment of financial knowledge. What does this tell us about Millennials and their money?

On the up side, 88 percent of Millennials have money in a checking or savings account, or both. More than 50 percent have a retirement account, 40 percent own homes, and 25 percent are invested in stocks, bonds or mutual funds.

On the down side, they’re also heavily indebted and borrow against their assets. Two-thirds have at least one source of long-term debt; and more than one-third have unpaid medical bills. In the prior 12 months, nearly one-third of those with a bank account had overdrawn it, and about one-fifth of those with a self-directed retirement account either had taken a loan or made a hardship withdrawal.

“Young adults may not understand the consequences of their actions,” says Ted Beck, president and CEO of NEFE, “such as how taking money out of their retirement accounts now has an exponentially negative effect on account balances in the future.”

Being aware of this knowledge/confidence gap in Millenials’ financial lives creates the opportunity to fill that void. Young people should be encouraged to work with trusted advisors (parents, grandparents, mentors, financial professionals) to explore education resources, expand their understanding of money management, and assess positive behavioral change.