Millennials are one of the most powerful buying groups in the consumer market and it’s no wonder. They accounted for $170 billion in purchases last year. What are the key factors that influence their purchases? Well, they are are vying for debit cards and cold, hard cash over credit. This is a new generation of spenders who are reshaping the definition of wealth. In fact, 46% say that financial success means being debt-free.
What does this new wave of spenders mean for merchants? It’s time to step up to the plate and remain relevant to the changing times in finances as more and more millennials are seeking transparency from stores for their more disciplined budget.
Here are 3 strategies to stay in the game and gear up for a new era of conscious spenders:
- Go mobile. Get social. YouTube, Twitter, and Snapchat are all excellent ways to engage with millennial spenders. These platforms of engagement are powerful and millennials buy what they can relate to. This also makes it easy for people to talk about your products and share reviews about their experience.
- Offer short-term, low-interest financing at the point of sale. Millennials are less likely to reach for plastic when making big purchases. In fact, 65% of them do not own a credit card for fear of getting into debt they can’t pay off. Now, they are saving up until they can afford to pay with cash or debit. What does this mean for merchants? Try out offering financing in the form of installment loan at the point of sale. Millennials who know what the exact amount the payment will be as well as the exact payoff date, feel less intimidated by it.
- Adhere to the digital wallet days. Mobile payments are by far the most popular method of payment for millennials. Staying savvy with millennials is all about meeting them where they are at: their mobile devices. Offering a variety of payment methods and combining that with technological engagement is sure to upgrade the experience for both merchants and spenders. Layaways are a thing of the past!
While Americans are doing better at saving than in past years, there’s still a little catching up to do! It’s estimated that 57% of U.S. adults have not reached $1,000 in savings yet. Notably, 39% of them say they have no savings at all. Period. Saving like a pro doesn’t have to be difficult. Below are 4 important “money pits” to avoid in order to prepare your savings for a much sweeter future:
- Not budgeting. Following a budget is essential for saving more money, yet only 41% households even adhere to one. If you’re not sure where to start, just keep it simple by writing down your monthly expenses or creating a spreadsheet that gives you a visual of spending versus saving.
- Buying a home that’s too expensive. Make sure your home is not your greatest monthly expense. No matter your income level, you should keep your housing costs (that includes rent, insurance, and property taxes) below 30%.
- Living in debt. With things like student loan debts, auto financing, and credit card debt, it’s no wonder the average American household carries $16,000 in personal debt. Pro-tip: Tackle credit cards first as they usually cost you the most debt. Try transferring your various balances to a single card with a lower interest rate than what you’re currently paying.
- Not preparing for financial emergencies. The waves of life can crash down if we do not stay prepared. Aim to have at least three months’ worth of pay tucked away for unintended events such as job loss or sudden illness. This will protect you from having to rack up debt in trying times.
Ironically, as we seek to understand the places in our personal finances that are lacking or problematic, we can better prepare and by adopting proper solutions. Knowing what not to do with our money can give us that edge to save for a more prosperous life.
As a new era emerges, tech-driven expectations will set the stage for a new platform of finances, especially in our relationships with banking. The Gen-Y’s for example, simply want more out of their banking experience, and they want it faster. Over the next five years, the consumer banking industry will have to revamp in order to keep up with the pace of digital banks and upstart fintech companies like Amazon and Google.
No need to fear, here are 6 ways banks can better align with a tech-savvy generation of customers:
- Redefine personal support. Staying up to date as a bank means utilizing technology to accommodate customers’ changing needs. As paper transactions begin to diminish, the interplay of a bank branch will look more like live video chats, social media sessions, and personalized office visits. In fact, 67% of millennials want their bank to provide tools and services to help them monitor budgets. This means the days of driving up to a teller window could dissipate sooner rather than later.
- Customize customer plans. In the beginning stages, banks can better understand their customer’s needs by customizing their mobile experience. Enhancing mobile bank statements with personal goals and savings tips, or offering families specific savings programs for kids are great ways to establish a solid relationship.
- Increase education. Many people feel overwhelmed about where to get financial advice, but only 7% of the customers actually turn to their banks for it. Making it easier and more accessible for them through webinars, social media forums, and predictive budgeting apps, are great incentives to relieve the pressure and build a better banking relationship.
- Watch your tone. This new age of banking requires transparency and an authentic voice – literally. Showing empathy towards customers and meeting them where they are at in their stage of life helps build trust and a stronger, long-term relationship.
- Step up your tech. Beyond ATM’s and mobile check scanning, the banking experience could upgrade to fingerprint or facial recognition in the near future. This means updating apps to offer access to inside real estate or local business networking opportunities. Staying up to date with the latest trends in technology, creating authentic relationships with customers, and intertwining the two could make for an innovative shift into a new dimension of banking.
- Build better branch experiences. Not many people actually look forward to going to the bank, but this attitude could quickly change. Banks in the UK have already implemented the idea of adding more enjoyable elements to the banking experience (some of them feature coffee shops.) Banking does not have to be boring. It’s about updating old systems that no longer work to better prepare for the tides of change. This could mean express bank tellers or financial associates who are available at a moment’s notice – perhaps while the customer is passing time at the DMV or even waiting to see a doctor.
Nearly 50% of Americans who have access to a 401(k) program do not contribute to it. Why? According to a new survey from Schwab Retirement Plan Services, Inc., the people who choose not to save, do so because of financial stress and damaging debts.
Keeping up with monthly expenses seems to be a prevalent factor for the non-savers. According to the survey, 45% of them reported either barely breaking even or being behind on their monthly bills compared to the 23% of savers.
Short-term stressors such as basic monthly bills, paying down credit card debts, and dealing with unexpected expenses and medical bills all contributed to the lack of savings towards their 401(k). Interestingly, it’s not that the savers don’t have the same stressors, they simply do not affect as many savers as they do non-savers.
Ultimately, the majority of people realize the great importance of 401(k) plans in saving. They are the largest or only savings tool for 53% of non-savers, and 60% for savers.
These surveys demonstrate the dissonance of knowing what to do, yet not enacting on it. In fact, 89% of savers and 79% of non-savers both rely on themselves or their spouses for retirement income.
Switching gears to a solid retirement plan starts with the decision to do so. Next, comes the discipline to remain vigilant in keeping it a priority. Start with a revised budget that allows you to put some money aside for your retirement fund.
Pro-tip: Think of your 401(k) as just another monthly bill and rebalance your budget as if your budget has dropped by the monthly 401(k) contribution amount. Rethink your daily dollar expenditures like the $5 latte runs or fast food grabs. Every cent counts, and the little steps to better savings mean a more enjoyable future of freedom.
Hidden fees and waiting in line – this is the price you to have to pay in order to access your own money. It’s no wonder that people are using less cash and making fewer ATM withdrawals than ever. And what’s more? The average total cost for using an out-of-network ATM hit a record of $4.69 per transaction. That means ATM fees have risen 55% in the last ten years. Ironically, banks are having to charge more because people are simply using them less.
Here are the top 5 metro areas with the highest ATM fees to avoid at all costs:
- Pittsburgh: $5.19
- New York: $5.14
- Washington D.C.: $5.11
- Cleveland: $5.11
- Atlanta: $5.05
ATM fees are bad enough, but let’s not forget the overdraft fees. Recently, the new average overdraft fee rose to $33.38. Consumers in Philadelphia, for example, have the highest average overdraft fee of $35.30.
The good news is that these fees are totally avoidable and there are several ways to save yourself from spiraling down the ATM loophole.
What can we do to rise above the fees and arrive at a better, more conscious spending solution?
Here are 5 tips to bear in mind before you stand in line at the ATM:
- Use your phone to find an ATM in your bank’s network.
- Get cash back without paying a fee when using your debit card at stores.
- Make it a habit to keep some cash on hand.
- Seek out banks that do not charge ATM fees.
Pro-tip: banks like Aspiration have no ATM fees worldwide.
- Use debit or credit cards.
Reshaping our mindsets in reference to outdated financial habits will enable us to protect ourselves from being nickel – dimed to death simply for accessing our funds.
Photo by G. Crescoli