The Millennial Mindset on Debt, Saving, Budgeting and Banking
Posted By Terri Williams on January 21, 2016 at 9:15 am
Millennials are in a unique financial position. Their generation is experiencing record levels of student loan debt, which has the potential to significantly impact their purchasing, investment, and savings choices, in addition to shaping how they make other financial decisions.
Also, as the first wired generation, Millennials have different expectations regarding money management and banking needs. The Millennial Money Report, a two-part study by Chime, examines banking preferences and also challenges in savings and budgeting money. Selected results are below.
Loans in general
68% of Millennials have at least one loan:
- 37% have a student loan
- 32% have no loan
- 34% have an auto loan
- 16% have a mortgage
- 10% have a personal line
Student loans in particular
When Millennials with student loans were asked how long they thought it would take them to pay it off, the majority thought it would take a while:
- 25% said 10 years
- 17% said 5 years
- 15% said 25 years
- 15% said 30 years
- 13% said 3 years
- 10% said never
Saving and budgeting
While 90% of Millennials think it is important to regularly set aside money for savings:
- 43% don’t use a budget to manage spending and savings
- 37% don’t regularly set aside money for savings
Also, 90% would choose to do laundry or some other chore – like washing the car, cleaning the toilet, visiting in-laws, going to the dentist, changing a diaper, or going to the DMV – over budgeting.
Millennials don’t seem to be too pleased with their banking options:
- 37% would not recommend their bank to a friend
- 31% would recommend their bank to a friend
The vast majority of Millennials don’t like going to banks:
- 48% prefer to use a bank app
- 40% prefer to use a bank website
- 12% prefer visiting a bank branch
Debit cards, credit cards and rewards
- 67% prefer debit cards
- 33% prefer credit cards
Millennials also want rewards for using their debit cards.
Shifting trends and timeless wisdom
Chris Britt, Co-Founder & CEO of Chime, says the survey reveals that young consumers expect on-demand services that they can access through their smartphone, and they want these services to save them time and money. He notes the shift in consumers who want to conduct all of their banking needs without ever visiting a physical bank branch. “We’re seeing a big transition – Millennials are bypassing brick-and-mortar institutions, and opting to bank, invest, and borrow money through unconventional channels,” says Britt.
When it comes to managing finances, he says that saving money is a challenge for most Millennials, and especially for young consumers who are saddled with student loan debt. “They are interested in using technology to help them save, but want solutions to be fast, intuitive and automatic so they don’t have to think about it.”
And while mobile banking options may help, Patrice C. Washington, Atlanta-based founder and CEO of Seek Wisdom Find Wealth, and money maven on The Steve Harvey Morning Show, tells GoodCall that even when saving is inconvenient, and student loan debts are burdensome, saving and budgeting are not optional.
“Both building savings and keeping track of your numbers are muscles that only strengthen with time, so failing to create these habits now can prove detrimental in the long run – even when Millennials have better-paying jobs or less debt,” warns Washington. She explains that just as saving is a habit, failing to save is also a habit – a bad one that they will become accustomed to. “I advise Millennials to get in the habit of saving even 3% of their net pay just to start somewhere and use mobile apps like Wally or Spendee to budget on the go.”