US Millennial: Financial Behaviors
The United States millennial is a unique group with varying ages, representing people born across almost two decades. The older group, 30 years old and older, came of age during the Great Recession, while the younger group, 29 years old or younger made observations about what to do or not to do in order to avoid the challenges their older counterparts faced. As such, they are making their own financial choices accordingly. Together, the group shares many similarities concerning their financial goals and habits, a few of which are discussed in some depth below.
- According to a Deloitte study, millennials financial priorities are eventually buying a home, paying for trips, going back to school and getting promoted.
- Nearly 80% of millennials say they can't achieve their financial goals due to debt.
- 60% or more of millennials have little or some confidence achieving their financial goals and need help with savings plans. Only 33% would consider a bank to help with their goals.
- Millennials want financial advice from a trusted adviser who understands their needs and unique challenges.
- 85% of millennials think artificial intelligence could help them with their finances.
- Fun tools like games would engage 65% more millennials to stay on top of their finances compared to 39% of Gen X and Baby Boomers.
- Older millennials, aged 30 and older, have a harder time saving money due to the Great Recession where job availability was scarce and wages were lower.
- Younger millennials, aged 24-29 who experienced a time of recovery after the recession, learned more of what not to do and as such take fewer financial risks.
- Millennials, who typically have bank account balances of less than $5k, with the majority having less than $1k in their savings account, are 2.5 times more likely than Baby Boomers, and 1.5 times more likely than Gen-Xers to switch banks with 83% of them likely to switch for better rewards according to a Kasasa survey.
- 94% of millennials prioritize no-fee banking, and will consider using a non branded local bank used by their parents or family members, especially if mobile banking is available.
- Online only banks are popular among millennials as they provide more technological conveniences, no fees, and higher earning opportunities than many traditional brick and mortar banks.
- Although millennials want the convenience of online and mobile banking, 66% of them still visit branches.
- 47% of millennials use mobile banking and 38% will ditch mobile banking if it takes too long.
Credit Card Usage
- 60% of millennials define financial success as being debt free.
- Many millennials don't carry credit card debt or have low balances which average $1,527. 65% of millennials don't own a credit card at all.
- A study conducted by Money Under 30 showed millennials are three times less likely to use a credit card. Their study, which included young adults aged 22-30, found that 74% had one credit card, and 13% had four or more.
- According to an Experian study, while millennials carry lower credit card debt, their debt is rising and increases with age.
- The same way millennials prefer bank accounts offering rewards and low fees, when considering a credit card, they want more perks, lower interest rates and no fees. Top reasons millennials use credit cards are for the rewards, for emergencies and convenience.
- 40% of millennials aged 31 and older prefer using debit over credit, while only 29% of millennials aged 30 and young prefer it over credit.
- Forbes cited studentaid.ed.gov to describe the enormous debt millennials have acquired through student loans. Millennials aged 25 to 34 had $497.6 billion in outstanding student loan debt. Those 24 years old and younger owed less than half of the debt ($15k vs $33k average balance per borrower) which may be due to younger millennials still attending college.
- A study conducted by TIAA suggested only 16% of millennials are financially literate. The same study showed 47% of millennials didn't look at what their monthly payments will be when pulling out a loan. 27% didn't understand their student loans.
- 20% of millennials think they'll still be repaying loans in their 50s.
Purchasing And Expenses
- Millennials who spend about 35% of their income on housing, are more likely than other generations to spend money on convenience and experiences. The majority of millennials enjoy extras like coffee at more than $4 a cup, dining at the most popular restaurants, and buying clothes they don't need.
- The fear of missing out (FOMO) often causes millennials to often live beyond their means. 48% have spent more than they can afford to keep up with friends.
- Millennials, who enjoy immediacy, give in to their impulses for instant gratification more than other generations. Those purchases are likely spent on new experiences.
- Online research about a product before an in-store purchase, most popularly conducted through Amazon.com or via a Google search, is observed in 40% of cross-channel millennial shoppers.
- Millennial purchases are expected to reach $1.4 trillion in 2020.
Purchases Influenced By Marketing/Advertising
- Recommendations from family and friends, email ads and consumer reviews are what influences millennial purchases the most.
- 24% of millennials are influenced by family and friends when considering a purchase and 84% trust friends and family to give good advice.
- 21% of millennials were influenced to make a purchase by opt-in emails they received.
- Influencer posts on social media impact millennials more than radio, magazine and newspaper ads.
- Millennials expect value for the money they spend on the product and good customer service. Brand ethics and social responsibility influence millennials perception and willingness to buy a product.
- Because millennials desire new and unique experiences, 74% will switch brands due to a negative experience.
- 60% of millennials prefer generic products over name brands, but an equal percentage are loyal to the brands they purchase and are more likely than other generations to stay loyal due to loyalty reward programs.
Savings Approach Toward Retirement
- 49% of millennials do not have a retirement account, but are increasingly saving for emergencies and contributing savings to a retirement account.
- 36% of millennials with access to a company retirement plan contribute towards it. 60% of millennials feel stressed out when thinking about how to save for retirement.
- Of the nearly 80% of millennials who are saving, almost 25% of them have accumulated $100,000 or more. More than 30% of older millennials have saved $100k or more.
To identify financial behaviors among US millennials, media articles, industry specific websites, studies and analyst insight was reviewed to find the most relevant and common trends over the past two years.