Karen Salamone Apr 12, 2018

From saving time to time to save: The role money plays in millennial lives

Perhaps more than any other generation, millennials embody a slew of contradictions. They labor under a host of pejorative labels: “lazy,” “entitled” and “narcissistic.” At the same time, they have been praised as “entrepreneurial,” “optimistic” and “idealistic.” Nowhere do such contradictions emerge as obviously as in their relationship with money and the role it plays in their lives.

The recession generation

Known also as the “recession generation” because of the prominence the Great Recession of 2008-2009 played in their formative years, millennials see money differently than previous generations. They harbor more skepticism than their Gen X and baby boomer counterparts and are more likely to keep their savings in a checking account or cash. They tend to avoid the stock market; they have an innate distrust of the government’s fiscal direction as well as corporate America’s profit-first ethos. They are more likely to spend their money on necessities, such as education and comprehensive healthcare.

Necessities or luxuries? It’s about time

At the same time, most millennials won’t blink at splurging on things their parents view as luxuries. These include same-day delivery of items bought on Amazon and other online retailers; Ubers and taxis instead of buses and subways; and eating out in restaurants instead of cooking at home.

Yet if considered carefully, all these indulgences have one thing in common: They save time. This may mark the most significant paradigm shift in generational spending habits. Millennials don’t view money as a means for purchasing goods and services: They view it as a means for saving time. They have little interest in status symbols and luxury brands, as did Generation X. They have little interest in living in the “right” neighborhood or belonging to the “right” country club, as did baby boomers.

For millennials, money represents a tool to support the way they want to live their lives. Although a necessity, it is not the end-all be-all that defines them. Neither is it the Holy Grail they dedicate their lives to seeking.

The hindrance of student loan debt

The most-educated generation in American history coincided with the most expensive era for earning a college education. This led to skyrocketing student loan debt—as of January 2018, the total student loan debt in the U.S. was $1.48 trillion, spread out among roughly 44 million borrowers.

This eclipses total credit card debt by more than $620 billion. A Class of 2016 graduate had an average of $37,172 in student loan debt, with an average monthly payment of $351. (Compare this to 1980, when the average graduate carried slightly more than $3,000 in student debt.)

A gloomy financial outlook looms

Saddled with debt, it’s no wonder millennials have a negative outlook on their financial futures. Their debt keeps them from a slew of activities that could improve their outlook, including:

  • Saving for emergencies (54 percent)
  • Buying a home (42 percent)
  • Saving for retirement (32 percent)
  • Starting a company (8 percent)
  • Getting married (6 percent)

Indeed, 39 percent report debt as the top source of their stress. Even more distressing, nearly 70 percent report never having learned how to handle debt.

A 2016 study found that up to 43 percent of millennials have credit scores that are considered subprime. Other research shows that fewer than half have credit scores that would qualify them for credit accounts with most mainstream lenders, and are declined even at high rates.

How financial institutions can help

When banks and credit unions focus on the financial issues millennials struggle with—and help them reach their financial goals—they can become trusted partners to this group. There are a number of ways to do this:

  • Provide the tools they need to monitor and control their financial planning, budgeting and spending
  • Empower them with advice and information to make smart financial decisions
  • Show them the tangible rewards that goal setting and follow through can achieve

For example: Since you know that many millennials struggle with saving money, show them what an extra $1,000 in their savings account could mean after one year —that they can rent their own place or put a down payment on a vehicle, thus making their reliance on public transportation more bearable. Help them track their goals via the web or a mobile app. And, when they reach their goals, congratulate them with a perk or bonus.

Doing these things before you pitch loan opportunities will show you are concerned about their overall financial health, and that you’re not out to hook them on another loan that simply adds to their debt.

Banks and credit unions that speak to millennials like trusted peers instead of authority figures—and help them navigate toward sound financial management—earn trust and respect over the long haul.

This will position them as institutions of choice when millennials need that mortgage, HELOC or car loan in the future—and open the door to the kind of lending that truly lends a hand.


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Karen Salamone is Vice President, Marketing at Harland Clarke.

For more articles like this, check out our recent Executive Report: "New trends in lending and mortgage".

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