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Millennials and Money: Redefining Wealth

Gayle Ronan | Dec. 18, 2013

Money With Meaning

Despite their reputation, Millennials do not appear to be maturing with the same attitudes they expressed when they were still teenagers living off their parents’ dime.

When it comes to their own money, the focus is not so much on shiny objects and the latest technology but on achieving:

  • A low debt footprint
  • Sufficient savings to cover their own children’s education (so they needn’t delay their adulthoods due to mounds of student loan debt)
  • A liquid reserve against future bouts of unemployment


Why Experiences Matter

Emphasizing experiences over luxury cars, homes and brokerage account balances may not bode well for economic expansion, but Cornell University researchers confirm that “purchasing” experiences enhances a person’s sense of well-being far more than the purchase of a possession can.1

The psychology behind this is simple: People tend to make comparisons to what others have and experience regret when they focus on their possessions. A new tablet, or for that matter a new home chock-full of the latest appliances, is no longer satisfying when the next generation of that tablet is released or a neighbor builds something bigger and better-equipped next door.

But, an experience is something only you possess. Even if your co-worker has indulged in the same small batch beer or visited the same vacation spot as you have, the experience you had is unique to you and it provides a lasting memory that is yours alone.


Financial Realities Make Experiences More Attractive

While Millennials have a sound psychological reason for valuing experiences over possessions, economic realities may underlie the attitudinal shift.

On the whole, Millennials (and Gen Xers) have amassed less wealth than their parents had when they were young.2 Since 1983, the average net worth of individuals between the ages of 29 and 37 has fallen 21%. At the same time, the average net worth of individuals between the ages of 56 and 64 has more than doubled. The Urban Institute, a Washington, D.C.-based research group, which crunched these numbers, concludes that Millennials are in danger of becoming the first generation in modern times not to become wealthier than the last. This could leave them vulnerable to entering their retirement years in a very poor financial position.

As psychologically healthy as their attitude toward money may be, Millennials clearly need financial help. But, they are only likely to accept it on their own terms.


Engaging Millennials

How can we get Millennials to seek the financial guidance they need? Millennial blogger, Jeff Fromm, offers a formula that summarizes the dilemma and potential solution:

Engaging Millennials = Enabling Discovery + Energizing Experience + Encouraging Advocacy3


Be Discoverable

For financial service companies, this means letting the Millennial audience discover why they think they need you and, once they do, providing them with access to the social media tools they look for to share their discoveries with their friends.

Likefolio.com, from TD Ameritrade, seems to be experimenting with this approach. It uses social media to lead Millennials from short-term thinking about their finances to convert them into long-term investors by monitoring what users and their friends talk about on Facebook and Twitter to determine what brands they like or would like. Then, it links them to the stocks of those companies, converting the social context to investing.


Offer an Experience

A number of banks are already experimenting with setting up financial “cafes” to try to position financial transacting as being on par with latte sipping. Meanwhile, financial intermediaries are cropping up that simply strip away the unappealing aspects of dealing with financial matters.

Users of Simple.com and Level Money have real-time, instant access to a single, ongoing budgeting “score”—the amount of money they can safely spend at that point in time without endangering tomorrow’s financial plans. It provides a greater sense of control, without requiring users to really take control of their budgeting.


Show Your Values

Sophia Bera, a Millennial and a financial planner, urges her clients and the readers of her blog to budget and save for retirement. But, while she advocates for aspects of traditional financial planning, she suggests a more effective way to budget is to match expenses to personal values. Her advice: If it doesn’t match your values, don’t buy it or use a company’s services.4 The implication is that what a company stands for is as important as what it sells.

As marketers, engaging Millennials may require a shift in what we focus on when presenting our companies. We need to do a better job of helping Millennials discover the meaning within our services and the value systems they support. The conversation is no longer one of just talking about features and benefits, but one of encouraging an experience and a fuller understanding of our brand story.


Generational Wealth: How the Social Sciences Can Help Capture Millennial Clients

It is a widely known fact among financial services professionals that more than $41 trillion will be passed on as inheritance over the next 50 years, the largest transfer of wealth in U.S. history. It’s also known that much of this inheritance will be going to Millennials (individuals born between the early 1980s and early 2000s) and that a majority of them (between 80% and 90%) expect to make different financial services choices than their parents upon obtaining their inheritance.5 This means a lot of money will be changing hands, making it more important than ever for financial services providers to secure Millennial loyalty in advance of intergenerational wealth transfers.


[1] George Lowery, “Study shows experiences are better than possessions,” phys.org, March 31, 2010.
[2] Caroline Ratcliffe and Signe-Mary McKernan, “Lost Generations? Wealth Building Among the Young,” Urban Institute's Metro Trends blog, March 19, 2013.
[3] Jeff Fromm, “Engaging Millennials: How Marketers Can Break Through,” Millennial Marketing, August 2009.
[4] Sophia Bera, “Building Financial Security for Gen Y: Laying the Groundwork,” genyplanning.com, Oct. 30, 2013.
[5] Cam Marston, “LOL Jennifer's $41 Trillion Inheritance,” Business Alabama, July 2011.


Gayle Ronan

Gayle Ronan

Gayle has over 25 years of financial services marketing, research, and writing experience to craft compelling content for the digital age.