5 Millennial Money Habits (& How They’re Changing the World)
Are you in your 20s or 30s? Do you cringe when people call you a Millennial and make sweeping proclamations about your generation as if you were from some new planet? The stereotypes have become so prevalent that one person took matters into his own hands with a hilarious Chrome extension that replaces the “m-word” with the term “snake people” (feel free to use it on this article).
It may be tough to live with all the attention, but bear with the rest of us. After all, people born in the 1980s and ‘90s,count for more than a quarter of America’s population and are shaping the world for everyone in new ways. Other folks are naturally going to be curious about the preferences and habits of this new generation of young adults.
One area where Millennial behaviors are making a big impact? The financial industry, where “business as usual” is quickly evolving to meet the needs of Gen Y’ers and their $2.45 trillion in global spending power. Here’s a look at five money habits of Millennials that are disrupting the status quo for the better.
1. Money talks.
Millennials are known to be more upfront than other generations about sharing their financial status with others, whether it’s student loan debt, credit scores or salaries. This straight talk is reflected in social media as well as in relationships. Case in point, a recent Nerdwallet study revealed that 98% percent of respondents age 25-29 say they’ve discussed finances with their partner at some point – the highest of any age group surveyed. Millennials lead the way in opening up long closed discussions.
When you consider that money issues are a leading cause of anxiety, depression, problems at work and marital strife, this trend toward transparency is refreshing– after all, you can’t get support for your problems if you don’t share them with others. There’s even evidence to suggest that sharing your income level – a once uber-taboo subject – can help reduce the gender pay gap, giving underpaid women the confidence they need to negotiate for a higher salary.
2. Buh-bye banks.
It’s hardly shocking that young adults are skeptical of most institutions, but they really don’t like banks. A three-year study from Scratch found that of the 10 brands Millennials hate most, four were banks. The study also showed that a third of Millennials believe they’ll be able to live a bank-free existence in the future.
In fact, many already do, thanks to the multitude of new options for spending, borrowing and saving money. Placing a premium on convenience, a number of young people use alternative financial sources such as prepaid cards, payday loans and PayPal, and look to non-traditional lenders for modern money strategies like student loan refinancing and low-down payment mortgage loans.
3. Thanks for sharing.
Coming of age (and entering the job market) during a recession has been a tough break for this generation, to say the least. Exorbitant student loan debt, a spotty job market and slow wage growth have combined to keep many Millennials from realizing financial goals like getting married and buying a home. But that hasn’t stopped them from finding creative ways to financially thrive.
A perfect example of this is the growth of the sharing economy, which can turn your car or spare bedroom into a lucrative side-hustle. While awareness of these options is up, usage is still somewhat low – but primarily driven by younger demographics. With benefits ranging from $19/hour for the average Uber driver to covering 81% of one’s rent by listing one room in a two-bedroom apartment on Airbnb, it’s likely those numbers will continue to climb.
4. Can’t buy me happiness.
Millennials tend to be driven by a desire for meaningful experiences vs. a penchant for material things. A study released earlier this year by Eventbrite found that 78% of those surveyed would choose to spend money on a desirable experience or event over buying a desirable thing, while 72% say they would like to increase their spending on experiences rather than physical things in the next year.
The good news is that science backs this strategy as a better path to happiness – recent psychological studies show that money can actually buy happiness, but only up to a point. Over time, people’s satisfaction with the things they bought went down, whereas their satisfaction with experiences they spent money on went up. Save your pennies and travel the world.
- Saving the world.
One of the most intriguing Millennial money behaviors – and something we’ve seen quite often among our own 20- and 30-something borrowers – is a heavy focus on altruism (a trait that’s earned them the nickname Generation Nice). According to Rackspace, nearly 40 percent of Millennials prefer to spend money on a good cause, even if it means paying more for a product. And many seek to work for companies that share their values and support causes that are important to them. This demand for socially conscious capitalism is becoming apparent in both established companies as well as startups seeking to attract talent and customers from the Millennial base.
Which means that Millennials aren’t just changing the financial world – they’re changing the world, period.