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How Millennials differ financially from Generation X and Baby Boomers

Lauren Wilson - June 7, 2018 - 0 comments

How Millennials differ financially from Generation X and Baby Boomers

The differences that define a generation also define their outlook on finances and their needs from banks and credit unions. We often hear broad generalizations about Millennials and money – that they are irresponsible with finances. But like most generalizations, if you scratch below the surface, the less the generalization seems to hold true. In fact, there are areas in finance where Millennials outshine Generation Xers and Baby Boomers before them.

To help understand these unique needs, here are a few ways that Millennials differ financially from the Generations prior:

1. Millennials lack financial literacy

A core difference for Millennials from their predecessors is their lack financial knowledge. Only 8%  say they have a high level of financial literacy, and only 24% a basic understanding of how to manage money. Unlike the generations prior, many were not required to take courses in school on managing finances and in the home, having and spending money is often mistaken for a solid foundation of financial literacy and money management.

This lack of financial literacy is also keeping Millennials up at night. In a report by BMO Wealth Management, 65% indicated that their current financial situation is their most concerning personal matter.

2. Millennials are better at saving money, but spend it on maintaining lifestyle

Despite their limited financial literacy, recent reports have continued to show that Millennials out-save other generations. A survey by Discover found that 81% of Millennials are currently saving in some capacity, compared to 74% of Generation Xers and 77% of Baby Boomers.  While a survey from Bankrate found that about 60% of Millennials who are limiting their spending in some way are doing it to save money, while only 25% of older generations who cut costs cited the same reason.

Millennials opt to save their money more conservatively than their predecessors. This is partly due to lack of financial literacy but also their limited risk tolerance, having observed the dot-com bubble and great recession. Most are satisfied with stashing their funds in short-term savings options. Millennials hold 6% more of their savings investments in cash according to a Charles Schwab & Co. study of client data.

What Millennials choose to save for also differs. A Merrill Edge study reported that 81% of Millennials spend their money on traveling. Also topping the list for spending are eating out and investing in gym memberships. Most Millennial saving priorities are to maintain a desired lifestyle.

3. Millennials optimism has replaced planning for the future and retirement

The Millennial generation is also referred to as the optimistic generation. This optimism carries over into their outlook on retirement planning. Many have yet to consider what their future needs will be nor start saving and planning for retirement. Saving for retirement is low on the priority list with only 10% naming it a savings priority.

Despite this lack of planning an astonishing 47% of Millennials believe they’ll reach their retirement goals and only 25% say they are worried about their ability to retire. For approximately one-third, retirement is just too far away and for many, they have more immediate debts to pay off first.

4. Millennials are not using credit cards or investing in the stock market

A Bankrate survey found that only a third of Millennials have a credit card, compared to more than half of people age 30-49 own one and nearly 70% of people over 65. For many, they have opted to not use credit for fear of debt. This fear can stem from having accrued and paid off consumer debt themselves, having seen friends or family struggle to manage debt or entering adulthood with large amounts of student debt.

Tying back to Millennials lack of financial literacy, many are missing the opportunity to build positive credit history through the responsible use of Credit Cards. This lack of credit history may make it more challenging for them to achieve long-term goals such as auto or homeownership.

Similarly, fear is keeping many Millennials out of the stock market. 66% of people aged 18 to 29, and 65% of those 30 to 39, say investing in the stock market is scary or intimidating.  Higher than the generations before.

It’s important to note that these differences do not mean one generation is right while the others are wrong.  Rather than judgment, it’s the acknowledgment and recognition of the differences that Millennials are seeking from their financial partners.

In our next post, we’ll discuss some tips on how Banks and Credit Unions can address these differences and needs. The same changing environment that drives generational differences, will evolve to embrace the opportunities that come with them. Do you agree? Share your thoughts by getting in touch at

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