There’s been much said and discussed about the attitudes and behaviors of Millennials. One major point of scrutiny has been their approach to money.
They spend much less than previous generations. And despite getting older, this behavior, doesn’t seem to be changing. There’s one factor in particular worth examining that indicates the low spending habits of Millennials.
How much debt are Millennials carrying?
Here’s what we know. In a recent NBC News survey in collaboration with Gen Forward, researchers found that about a quarter of all Millennials are over $30,000 in debt. Eleven percent of those surveyed between the ages of 18 to 34 possess a staggering $100,000 in debt.
A large chunk of Millennial debt is related to college tuition. Research from Harvard Kennedy School revealed more than two-in-five Millennials between 18 to 29 have or know someone in their household with student debt. This is no surprise considering that prices for US college tuition and fees have risen each year over the past six years according to Time Money.
To illustrate the disparity in actual figures, the report noted that Gen X’ers held an average of $130,000 of wealth and assets in 2001. Meanwhile, Millennials in 2016 had net worths of about $90,000 largely due to less ownership of investments such as homes as well as possessing much more debt.
How has debt impacted Millennial spending habits?
Due to limited spending prowess, there’s been great debate over how Millennials use their money. Numerous studies and reports have cited evidence that Millennials find more value in experiences rather than things. There’s no question, however, that debt has made Millennials much more frugal than their predecessors.
About 90 percent of people ages 18 to 29 years old said discounts and coupons were important factors in online purchasing decisions according to a survey by Bizrate Insights. The findings of this study were noted in eMarketer’s eCommerce Insights Report that was published in May 2018.
How does the deal-saving mentality of Millennials compare with older generations? According to a survey from RetailMeNot, only 40 percent of those ages 55 and older said they always look for sales and promotions before buying something online.
The penny-pinching attitudes of Millennials have also made them better savers than previous cohorts. The motivation to pay back university and credit card loans are perhaps driving factors behind Millennials’ propensity to save more of their income. Additional data from Bank of America supports this, reporting that roughly 38 percent of Millennials saved more than half their salary compared to 19 percent of Gen X’ers and 14 percent of Baby Boomers.
How can marketers build campaigns that resonate with the frugal nature of Millennials?
As a brand or a company that markets to Millennials, you’re probably wondering what you can do. How can you ensure you’re successfully engaging with a cross-section of people that are valuable, but often thrifty when it comes to opening their wallets. Here are a couple solutions.
Offer savings and deals: As the data above indicates, Millennials can be better persuaded to make a purchase if they know they’re saving money. This might mean sacrificing some when it comes to profit margins. However, providing good deals and savings could also equate to increased sales that make up the difference.
Showcase the experience: Even if you’re selling an actual product, demonstrate how it will create an impactful experience for the consumer. Don’t be bogged down by the minutiae of promoting all the specs and technical details of your product or service. Instead, focus on how it will leave Millennial customers feeling improved after it enters their lives.