Millennials may be the leading edge of an era of personal financial conservatism.
Earlier this month, the Otaga Daily Times of New Zealand wrote an article saying “Gen Y was the most money conscious generation”. They had research to back up it: a survey of 10,000 by Retail Financial Intelligence suggested Millennials were “the most money conscious and financially savvy generation following recent global turndown”.
Gen Y was more likely to pay off debt and prone to change financial institutions for the best deal. Almost three quarters of respondents said they had a savings goal and were future-focused and not interested in immediate luxuries. Gen Y was more likely to have switched cards and about 68% of Gen Y respondents valued feature-packed products to a greater extent compared to the average respondent at 62%. The group is also more pessimistic than the average in their outlook on the economy and particularly concerned about the effect of interest rates and economic environment on their financial situation. About 70% of Gen Y mortgage holders would consider switching their loan for a difference in rate of up to 1% compared to the average of just 43%.
Research in the U.S. by Microsoft last August found a similar pattern of financial sophistication and even “cynicism” among America’s Gen Y:
The survey, conducted by Washington-based KRC Research in August, found that people born between 1981 and 2000 have developed a cynical view of banks and investment firms after the near-collapse of companies such as American International Group and Citigroup. Of those surveyed, 67% said they’re wary of stocks because of the weak economy, and 82% are concerned that more financial institutions will fail. Fifty-one percent said they’re unlikely to put money in 401(k) plans or other retirement accounts.
More recently, Fidelity reported research that found Millennials were becoming more conservative with money, even as they cope with massive debt from credit cards and college loans.
Despite the fact that three out of four Gen Y workers feel secure in their jobs, over 70 percent are very concerned about their finances and have set the goal of daily money management and budgeting as their biggest focus. Most Gen Y individuals are using mobile technology to stay updated on their cash flow situations with 64 percent reporting that they typically check their balances online before making a purchase of $300 or more. On average, this younger generation holds over three credit cards with one fifth (20%) carrying a balance greater than $10,000 and one in four (25%) believing they will never be free of credit card debt during their lifespan.
End of the year posts from many Millennials are speaking proudly f their fiscal restraint in 2009, and intention to continue on the path of responsibility in 2010. Here’s Matt Chevy of the popular Gen Y blog, “Life Without Pants“:
“I’ve worked insanely hard at my full-time job and freelancing on the side to get to where I am today- almost 100% debt free. In the first quarter of 2010 I WILL be debt free – and then can start actually saving some money for the first time in my life.”
The marketers most in tune with what Millennials need in financial services is Mint.com. The company was acquired last month by personal finance giant, Intuit for $170 million. As part of the deal, Mint.com’s Gen Y founder, Aaron Patzer, became general manager of Intuit’s entire personal finance group, “responsible for Mint.com and all Quicken online, desktop and mobile offerings.” This suggests Intuit understands the importance of online tools and mobile accessibility to Gen Y. According to the Microsoft study, “Millennials prefer to conduct their banking through personalized Web portals and smart-phone applications. They also favor new methods of business communication, such as online chats.”
Based on a look around its web site, Mint.com fits the bill, so to speak, nicely. It provides an easy-to-use, FREE interface for tracking online one’s entire financial picture in one place. In addition, Mint promises to save its customers money by comparing “our bank accounts, credit cards, CDs, brokerage, and 401(k) to the best products out there.” Mint has over 1.5 million users and claims to have over $50 Billion in assets, as well s $200 million in tracked purchases. Not bad for a two year old company — and testimony to the value of the service.
What I like best about Mint.com is that it feels almost like a game. There are built in satisfactions to saving money and Mint makes it fun to see how you can “win” by saving more. Of course, it wouldn’t work if Millennials didn’t already have the desire to save. Kudos to those who actually put the desire into action.
