Are you tired of hearing about millennials yet? Well it’s time to get used to the conversation, because this group isn’t going anywhere anytime soon. Financial and marketing industries are quick to analyze their habits because soon they’ll have the most spending power of any generation. And, as it turns out, we may have something to learn from them when it comes to managing money.
This group is chock full of some serious savers. In fact, according to a new study by Bankrate.com, 62 percent of millennials are saving more than 5 percent of their pay which is up from last year’s 42 percent reported. And it’s more than the half of older adults (30 and up) saving 5 percent or more.
Many millennials are unsure how much, if anything, will be left of the Social Security program when they reach retirement age, so they’re already thinking about retirement and actively saving for it. So much so, that they’re almost caught up to what Gen X should be stashing away for retirement preparedness. Millennials are saving for retirement quicker than any other generation according to Time.
This group came of age during one of the roughest financial recessions in recent history. They saw firsthand what their parents lost in investments and that has impacted where they trust their investments. Millennials’ saving and investment habits resemble that of the “Depression Baby” generation. They look for low risk investments or save cash. Another Bankrate.com report revealed that Americans 18-29 are more likely to invest cash long term over any other age group. And 39 percent said cash was their preferred way to invest money they won’t need in the next 10 years. This ultra-conservative approach could have them missing out on big opportunities for growth in their retirement funds.
Even though they may have some of the same saving habits of their grandparents or great grandparents, they are saving money in some unique ways. They’re more willing to use coupons than other generations, they will sacrifice luxury for a better price and they are willing to sacrifice in order to save up for something they want. This trade up/trade down mentality is a breath of fresh air from generations past as millennials are finding savvy ways to cut costs.
By learning more about millennials’ savings habits, financial institutions can speak more effectively to this group and what they need for money management. Having the best technology or a fancy spokesperson isn’t what will draw this group in. Instead, act as a resource of information. Aid them in decision making by providing information rather than selling a deal. Get to know their goals, like paying down debt or saving for a vacation, and then help to achieve those goals. Keep analyzing and keep communicating, because this group isn’t going anywhere and neither is what we can learn from them.