Despite stubbornly high unemployment rates, Millennials’ purchasing power is growing rapidly. At nearly 40 million strong, this group is expected to contribute to the economy in a big way, spending $200 billion annually starting in 2017, and investing a higher%age of their income than any other generation. As far as personal finance and financial-centered products are concerned, we can’t afford to ignore them. And lucky for us, Millennials are more open to financial advice than any other generation. As we make an effort to speak more directly to Millennials, here are three key things to keep in mind:
Mobile finance apps and payment options are on the rise overall, thanks in part to Millennials, who are largely underwriting the mobile trend. According to Fiserv’s 2013 Billing Household Survey, Millennials are increasingly responsible for paying bills, and they prefer to use the mobile channel to manage their finances, with 74% of Millennials reporting that mobile payment options are important, compared to 67% of total respondents.
Mobile payment is also enabling group activity, with Millennials turning to apps such as Venmo and Tricount to settle debt between friends. With Venmo, users simply enter their bank account information and can repay another Venmo user through the app. Tricount is perfect for coordinating a group outing: it allows users to divide expenses by each person and how much they owe, and then it sends out an email so everyone knows their share. These hold people accountable without having to send sideways glances or passive-aggressive texts to that “frenemy” who never pays!
Millennials are also fans of Mint and DailyCost, apps that help track the money they spend in various categories and stay true to a budget. Both apps show personal spending in a more visual way than a standard bank statement, with graphs and statistics on daily or monthly spending. As Millennials are spending almost $200 billion per year (and making more per year in their careers), apps such as these will continue to be relevant and will (hopefully) help us to manage our national debt.
Interest in Personal Finances
From 2000 to 2010, we’ve seen an increase in college enrollment by 37% (National Center for Education Statistics). More approved university applications means an increase in student debt. The total amount of student debt is now $956 billion, surpassing the $674 billion credit card balance carried by the nation as a whole (2013 Q3 Quarterly Report on Household Debt and Credit). But it isn’t all doom and gloom for indebted Millennials; the silver lining is that they have much more interest in learning about finances than do older generations. According to a Wells Fargo survey on student debt, 79% of Millennials think personal finance should be taught in high school. And how to save for retirement, basic investing, and how loans work were the top three topics they wish they had learned more about (Forbes 2013).
Post-school, Millennials are making a concerted effort to learn more about managing their finances, and they are seeking information from workshops, online classes, financial blogs, and social networking sites. Financial blogs such as Daily Finance show a range of savings topics, from “food and drink” to “technology” to “travel and leisure,” and offer a number of ways to save in those categories. For example, “food and drink” talks about saving money at coffee shops by bringing your own mug, or freezing your food to save money in the long run. Other sites such as Skillshare host online classes that cover a range of topics, including personal finance and managing budgets. What Millennials love about these classes and blogs is that they are always available, usually free, and are open to anyone looking to invest in their personal finances.
Financial Institutions are Friends, Not Foes
Blogs and online classes aren’t the only outlets taking note of Millennials’ growing interest in personal finances. Banks and other financial institutions are attempting to forge a relationship with young customers by offering education as well. Chase and Wells Fargo both offer personal financial guides on their websites and have created an interactive space for young investors to learn more about their money. They’re doing something right because Millennials are more trusting of the financial services industry than any other generation. According to Forbes, half of Millennials trust their bank to provide them with what they need to help them reach their goals, while only 40% of each of the other generations had the same opinion. While Millennials might not be able to invest much today, it would be wise for financial institutions to court them now so they are prepared when young people are ready to bankroll big-ticket items, such as a house or their children’s education.
Regardless of the business you are in, keep these Millennial trends and behaviors in your back pocket. This group of nearly 40 million is open to financial advice on a number of platforms, but might not know exactly where to look—or may be afraid to ask. Giving them the tools and resources needed to lower debt and understand investment will forge a long- term relationship that reaps dividends for them and the brands savvy enough to engage them.