As one of the largest generations that the nation has ever seen starts to get out of college, we will start to witness a completely new type of adult. Over the next decade the Baby Boomers will retire in greater and greater numbers, Generation X will move into upper management, and Generation Y will take the playing field as the most technically advanced, most diversified, and most worldly workforce ever known. And with new jobs, come financial decisions…
Our research helps shed light on Gen Y’s financially literacy, how comfortable they are with credit cards, as well as their propensity to save and invest. While 90%+ of Gen Y has not yet had to shop for rates on a car loan, 11% of them had credit cards in high school. With their amazing adoption of the internet (97% Gen Y college students own a computer) they will be fast and efficient at shopping for rates and service levels on products such as savings accounts. Much research shows that they are more likely to live with their parents or with a parent subsidized lifestyle in their early adulthood than any generation to date. In the US economy today where average income has not grown as quickly as the cost of living in many regions, it is likely that as 2010 rolls around and older Gen Y’ers begin to look at first mortgages, they will need a little help from both mom and dad (75% of Gen Y has a working mom).
This information rich group of people will learn how to compare and contrast financial scenarios in ways yet undefined. While baby boomers needed to visit or call the mortgage broker to get the latest rates on home loans and to even calculate what their monthly mortgage would be on a first home, Gen Y takes a different approach. Gen Y, whom may not have the ability to spell m-o-r-t-g-a-g-e (they’ve had ‘spell check’ since they first learned to write type),researches properties, searches home loan rates on numerous institutions large and small, calculates mortgage payments with mortgage-focused-calculators, monitors their credit report monthly, and even procures their own mortgage all online – possibly without ever talking to a person.
While their first real world exercise in budgeting may have been focused around limiting their cell phone usage rather than stretching their allowance, Gen Y has access to more financial research than they can possibly know what to do with. Historical stock quotes, debt pay-off modeling, and detailed retirement plans will take minutes to find (if not seconds) for Gen Y. They will manage their finances through web sites, cell phones, and ATMs possibly without ever coming any closer than a chat-session to a real financial advisor. It is important for financial services firms to understand that marketing to this demographic will require a keen understanding of their preferences in communications.