How should banks and credit unions market themselves to Millennials? This is a big, burning issue in banking, and there’s no shortage of research on the topic. The Financial Brand has pulled together these 50 facts about Millennials and their money from four different studies by reliable sources in the banking industry — FICO, Moody’s, Northwestern Mutual and iQuantifi.
Millennials aren’t the savers they think they are.
Two thirds of Millennials (64%) say they are more inclined to save than spend. However, people under age 35 are not saving money, according to a study by Moody’s Analytics. In fact, their savings rate has dipped to negative 2%, meaning that they’re spending more than they have. They’re the only age group that has a negative savings rate. In contrast, workers between the ages of 35 and 44 have a positive savings rate of about 3%, and for those 55 and older it climbs to 13%.
Things were a lot worse just a few years ago. Millennials had a negative savings rate from 2004 to 2009, bottoming out in 2007 with a deficit of about 15%, according to Moody’s. Millennials turned things around in 2009 and managed to stay above water until 2012, when they slipped back into the red.
Millennials call themselves reckless.
Millennials are twice as likely as the general public to say their generation is irresponsible. Over one third of Millennials (36%) describe their peers as “not at all responsible” compared to only 17% in all other age groups. Similarly, only 7% of Millennials describe their generation as “very responsible” vs. 19% of those in other generational groups.
Millennials are lousy with budgets.
One in six Millennials admit they lose sleep over their financial situation.
Millennials struggle with basic budgeting. 41% say one of their biggest financial challenges is “staying on budget/plan,” and yet 28% confess they need help developing the budget/plan in the first place. Only one in five claim they have a comprehensive plan in place that will help them achieve their financial goals, even though more than half (53%) say having such a plan is absolutely necessary. Sadly, one in seven say they don’t even know how to set about creating the budget/financial plan they need.
The good news? Nearly half (46%) say they want to get their finances in order. 19% feel like they need help when it comes to making financial planning decisions. But where are they going to get that help and advice? 12% say they have “no idea where to start.” 17% say they are only comfortable getting advice from people they can meet face-to-face.
Millennials trust friends and family, not their financial institution.
If a Millennial needs financial advice, someone who works at a bank or credit union would probably be the last person they would talk to.
Among those who have discussed retirement, roughly one quarter (24%) have chatted about it with their spouse, while 42% have talked with a friend or family member. Only one in 10 Millennials have sought professional investment/retirement advice compared to double that number for all other age groups.
But the truth is, Millennials spend very little time thinking about their financial retirement goals. More than half (55%) say they have never spoken to anyone about their retirement.
Millennials don’t like the way banks communicate.
Many Millennial consumers believe that their primary financial institution doesn’t send them marketing materials that interest them. Nearly half (46%) said their bank does not send marketing materials that are relevant to a future financial need. Two in five Millennials also complain that the offers they do receive aren’t personalized.
“I get a lot of advertising stuff from Wells Fargo,” bemoans one of the bank’s Millennial customers in a video from FICO on YouTube. “It just goes in the trash… immediately. I don’t think my bank understands me as a human being. [My bank] is just a hole where I throw my money into.”
Somewhat paradoxically, nearly 75% of Millennials say they don’t receive too many offers from their bank, so they are open to more communication. Millennials might say they would be receptive to more communications from their bank, but only if they’re sent via one of their top four preferred channels: (1) email, (2) text message, (3) bank website, and (4) bank’s mobile app. And yet 43% of Millennials don’t think that their bank communicates to them through their preferred medium/device.
In the FICO video, another Millennial consumer echoed this sentiment: “[My bank] still sends me stuff in the mail, which is weird and annoying, and I don’t want that.”
Millennials face a mountain of debt.
The average debt is $47,689 for Millennials. More than a quarter (27%) admit that managing their debt is a big financial challenge. 39% want to pay off all their debt in the next 3-5 years.
31% of Millennials are carrying student loans, while 35.4% of them have auto loans. The vast majority (82.0%) say they have a credit card, with another 6.8% saying they have plans to get one. And yet 42% say that one of their big financial goals for the next year is to use their credit card less, and nearly half (52%) are worrying about getting their credit card debt paid down.
Millennials are financial optimists.
59% of Millennials say their financial situation will be better this year than last. Only 41% of the general public feels the same way.
Similarly, 46% of Millennials say that if they work past the age of 65, it will be by choice not because they have to. That’s markedly different than the rest of the population, where 62% feel they will have to work well past the traditional age of retirement out of necessity.
Millennials generally have a rosier view of their Golden Years than everyone else. 27% of Millennials are comfortable Social Security will take care of their needs vs. only 21% of the general population. In fact, 30% of Millennials believe they will have enough money socked away to retire comfortably, while only 21% in other age groups feel the same way.
Despite their young age, 71% of Millennials report feeling secure or very secure that they will achieve the financial goals they’ve set for themselves. Perhaps they will grow more skeptical as retirement draws nearly and becomes more of a reality?