Knowing how to make, manage and invest one’s money has long been the key to financial security and stability, but what was once a relatively linear road map for many generations has shifted with Millennials. Currently the largest generation in the American workforce, this group is hitting traditional financial milestones much later than previous generations. With crushing student debt and a general distrust in traditional banking and financial services, Millennials know less about managing personal finance than any other generation before them and have vastly different ideas about what constitutes financial success.
While buying a home was once seen as one of the biggest indicators of financial success, Millennials now have a different idea. According to a recent report conducted by Facebook, 46 percent believe that being debt free is the biggest sign of financial success. Less than half that number, 21 percent, still place home ownership as a top priority, reflected by the perennially low home ownership rates among those under 35-years-old. Even lower on the list is retirement, with only 13 percent of Millennials believing that retirement is a priority. In fact, our research found that many Millennials don’t believe that they’ll ever retire, and as such, don’t bother learning how to retire successfully or gain financial literacy on the subject. This is becoming such a common occurrence that some companies are starting to offer loan repayment perks in addition to standard 401k benefits to entice younger workers. After all, it’s hard to think about the future and plan long-term when you can’t get yourself out of your current, problematic financial situation.
With the average college graduate now owing $35,000 in student loans, it’s not surprising that many Millennials prefer debit cards to credit cards. Adding to this, Millennials have also distanced themselves from traditional banking methods and financial institutions. A new national study we conducted with Global Cash Card found that out of the 53 million Millennials that are considered employed, about five million do not have a checking account. Our research found that the main reason for this is a distrust in banks, cited at 48%. Non-traditional banking methods like paycards are emerging as a viable and beneficial alternative for Millennials. In fact, 75% of current paycard users said that paycards help them save for retirement, and roughly one-third of Millennial workers – more than 18 million people – expect this would be the case if they received their wages on a paycard as well. With Millennials and current paycard users shown to be the most likely to receive payroll education and understand their options, these findings speak volumes.
Despite Millennials’ tendency to live in the “now,” it’s imperative that they look ahead and map out their financial future before it’s too late. By taking action and gaining financial literacy early, Millennials give themselves the best possible chance of successfully navigating a very different financial world than generations before them.
Jason Dorsey is the Chief Strategy Officer and Millennials Researcher at The Center for Generational Kinetics. He leads The Center’s team of PhD researchers as they uncover new generational trends and truths while solving the complex generational challenges his clients face—especially with Millennials (Gen Y) and the next generation, Gen Z. Jason has been featured as a generational expert on 60 Minutes, 20/20, The Today Show, The Early Show and dozens more.