A great many Millennials believe their generation faces tougher economic circumstances than their parents’ generation. Nearly two-thirds of them feel that way, according to research from Mintel. Some of their parents may be inclined to think their offspring are overreacting, or just whining.
But are they? The answer is important for financial marketers hoping to connect with a generation that is, or soon will be, the largest generation.
Consider that all but the youngest Millennials were just entering the job market or were early in their careers during the Great Recession of the late 2000s. Many of them experienced less economic growth in their first decade of work compared with other generations, according to Deloitte research. Other studies cited by Deloitte suggest that there are long-term negative effects on wages and careers from people entering the labor market during a recession.
In addition, research finds that Millennials as a whole have less trust in employers, governments and the stock market, are worried about another recession, and have been putting off big life moments such as having children and buying a home. This is not always a function of debt overload. “They aspire to travel and help their communities more than starting families or their own business,” Deloitte observes.
Mintel asked a panel of Millennials, “What does financial success mean to you?” The research firm cites one young woman’s response as indicative of the way many Millennials view their financial lives:
“Right now I think it means not having to lose sleep over having enough money to pay the bills, keep food on the table, and buy necessities. Overall, financial success means not having to worry, and maybe having some money in a savings account, put aside for emergencies.”
Not the kind of definition of success that would have characterized earlier generations.
Indeed, research by mobile banking company Varo Money finds that more than one third (35%) of Millennials say they lose an hour or more of sleep a night because of regular financial pressure and worry over it. Just over half (52%) say the stress is damaging their health, and nearly as many (47%) say the stress makes them want to give up on their dreams.
‘That’s Your Dream, Not Mine’
In its study of 1,100 younger Americans, Varo found that Millennials are revising their view of the American dream, “focusing less on tangible achievements like home ownership and a steady job and focusing more on freedom and happiness.” This isn’t a devil-may-care attitude — “Financial security/peace of mind” is still the top characteristic they mention — but younger Americans are replacing the ideals of their parents of home ownership and job security with a more expansive idea of the American dream, Varo states.
One of the underlying reasons for this change in view, cited by almost half of the Millennial respondents, is that social norms have changed. College grads in the 20th Century could expect to get a job out of school and work their way up the corporate ladder, often at the same company. Now it’s a tougher job market and business practices have changed.
While just over half of Millennials believe their parents achieved the traditional American dream, only a little over a third (37%) think they can. In fact, slightly less than half (47%) think they can achieve even their new idea of the American Dream, according to Varo.
Women are more pessimistic about fulfilling their economic dreams than men — 51% of Millennial women feel achieving the new American dream is impossible compared with 43% of men. Further women are more likely than men to be anxious and stressed about their financial future — 49% to 36%.
Even though Millennials are distrustful of corporations and are more focused on emotional rather than material ideals, the Varo study found a growing disconnect with previous generations. Nearly half (46%) say their parents don’t understand their generation’s financial struggles and 25% actually blame their parents for their financial situation, according to Varo.
Debt Loads Shape Millennial Mindset
Much has been written about the extraordinarily high levels of student loan debt carried by many younger Americans.
It is a primary factor shaping Millennials’ view of the world. Not only that, but this generation has seen that even though they are significantly more educated than their parents, the purchasing power of a college degree has hardly increased, according to Mintel.
With student loan debt balances up 128% in the last ten years, it’s not surprising that about one in three Millennials say that the level of debt they carry causes them significant stress. Just over a quarter have had to borrow money from their parents.
Money management is not their long suit. Just 38% of Millennials follow a monthly budget, according to Mintel. However, it’s a generation that is also concerned with the welfare of others. So, despite their own challenges, one in five Millennials donate money to charity.
The Varo survey paints an even starker picture: 55% of the 1,100 Millennials responding say they have “way too much debt.” One in three say they’d rather be debt free than have down payment to put on a house.
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Some Suggestions for Financial Marketers
All this makes for a particularly challenging assignment for financial marketer. Nevertheless, banks and credit unions can conclude from this new data that certain characteristics are common to a majority of Millennials. Mintel sums these up as: the stress of high debt loads, the importance of family, and a preference for experiences over material possessions.
“Companies that can speak to broad generational concerns while offering personalized products and solutions will have a much easer time winning over a Millennial audience,” the Mintel report states. The company does caution against putting all Millennials in a box. Not only are Millennials a very diverse generation in terms of age, race, and gender, but having come of age during the convergence of economic upheaval, social change, and rapid technological change, the generation is more unpredictable than its predecessors, according to Mintel.
While most banks and credit unions do not yet have the capability to be able to target a “market of one,” knowing that Millennials generally speaking have delayed starting a family and purchasing a home can assist in more appropriate messaging to them.
Clearly any financial institution that can earn the trust of this generation, could do them a great service by assisting in budgeting, financial planning, and saving. As a generation that is highly comfortable with all things digital, institutions that can provide mobile-based automated solutions should resonate with Millennials. But the segment is not averse at all to in-person conversations. So having knowledgeable staff available in branches, by video or even live chat, would also resonate.