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For Millennials, a world of tough financial choices

The Millennials have been saddled with more complicated big-ticket financial decisions than earlier generations, but it's still not too late for financial institutions and policymakers to take steps to make their future less risky. That's according to a report issued Friday by New America, a nonprofit public policy institute.

"The Great Recession created a perfect storm for financial vulnerability when it coincided with Millennials' coming of age, weakening their already precarious financial health and exposing them to risks that may further undermine financial health, like using alternative financial services or carrying burdensome debt," says the report, which was funded by the Investor Education Foundation of the Financial Industry Regulatory Authority (FINRA).

The report argues that financial education, hands-on experience (such as opening a savings account early) and changes at financial institutions can make a difference.

And while the baby boomers and Generation X faced their own challenges, what's different for the younger generation is not just that costs are higher but that the complexity has increased.

"College financing is more complicated, and more expensive ... and they have to make these decisions really early, at age 17 or 18," Terri Friedline, co-author of the report and an assistant professor at the University of Kansas School of Social Welfare, told CBS MoneyWatch. "Same with the housing market."

The Great Recession "systematically undermined Millennials' financial health by limiting employment opportunities, stagnating income growth, reducing net worth and increasing reliance on debt. Millennials entered a labor market with limited opportunities and saw higher unemployment rates than the rest of the population," the report observes.

A separate report issued last week by the Economic Policy Institute found that the slow pace of the economic recovery has forced more college graduates to find work in low-paying jobs that don't even require degrees.

The typical Millennial now has about $1,000 in savings and a net worth of $10,000, relatively lower than earlier generations at that age. About 85 percent hold some type of debt, with the average burden at $60,000, most often in credit cards, auto loans and installment loans, according to the New America report. And for the class of 2015, they're graduating with an average student debt load of $35,000 the highest ever, according to an analysis of government data by Edvisors.

Only 19 percent of Millennials are considered "financially capable," meaning they have a savings account and have received some sort of formal financial education from their school or workplace. Among lower-income Millennials, that rate drops to 8 percent, according to Friedline's report, which used data from FINRA's 2012 National Financial Capability Study. And 44 percent of Millennials have already used alternative financial services such as payday lenders.

One way to make it easier on these consumers is to increase transparency and offer more inclusive financial products, Friedline said. Her report cites a Federal Deposit Insurance Corp. survey that found only 40 percent of financial institutions had services for lower-income populations, and only 20 percent offered "second chance" accounts to consumers with damaged banking or credit histories.

"As a way to recover the trust that was lost during the Great Recession and to evolve their service provision to Millennials and future generations, financial institutions may need to be in the business of inclusion," the report concludes.

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