Baby boomers and millennials differ in many ways, and one main difference is how they handle their finances. Two very different, very impactful U.S. financial crises shaped these two generations’ thoughts on money. The focus for marketers has turned completely to millennials now that they are the larger consumer group, but boomers shouldn’t be forgotten so soon! To better understand the financial preferences of these two generations, I’ve outlined a few main differences and ways that banks can best support them.
- Credit Cards and their Customer Service– Baby boomers prefer full service and flash. They opt for card companies that provide customer service representatives to do things like make reservations, purchase tickets or solve problems, while millennials prefer the simplicity and immediate gratification of the Internet and mobile apps. They also prefer a more interesting card design like clear or a cool blue vs. platinum or shiny gold. Instead of catering to only one generation’s needs, banks should upgrade their mobile banking capabilities and ensure that the option to speak with a customer service representative is easily attainable.
- Saving and Spending– Following a more traditional path, baby boomers made large purchases like cars/homes early in life. Millennials on the other hand earn 20 percent less than baby boomers at the same age and opt to live in large urban cities like Los Angeles and New York, making home ownership a rarity for millennials who choose to rent over buy and cars less of a necessity with the rise in popularity of ride-sharing apps. Millennials would rather save their cash than invest it while boomers are more comfortable placing their money into accounts that promise a return in the long run. Banks can assist these two generations by creating more approachable features like “money genius bars” to demonstrate best savings tactics and strategies in a non-threatening and fun way.
- Donating– Millennials invest in brands that share their values and tend to be suspicious of large corporations who aren’t transparent with their finances. Baby boomers generally donate to causes that are close to their own heart, for example, if a family member passed away from cancer they are more likely to support a foundation researching for a cure. Millennials also have come to be known as generous and donate to causes that move them emotionally. Crowdfunding sites like GoFundMe and YouCaringwere founded by millennials, and the donation campaigns are shared via social media websites.
- Travel Spending and Credit Card Points– Baby boomers are all about luxury and service. They want 5 stars and first-class tickets when they use their credit card points. Millennials on the other hand prefer flexibility. When making travel plans, millennials like to take adventurous vacations and want to use their points for experiential activities like jungle river tours or zip-lining excursions. Along with travel, millennials want to use their points for Ubers or gas cards. Unlike Baby Boomers, millennials want full service online without having to call anyone, and a points system that reflects their lifestyle.
- Mortgages– Baby boomers were able to purchase houses as soon they graduated college or came of age. Millennials came of age during the Great Recession and even their college degrees weren’t getting them proper jobs. Seeing their parents struggle through financial hardship in 2008, the younger generation adopted a frugal lifestyle. Millennials also face a lot of setbacks when it comes to purchasing their first homes. “Boomerangnig” and moving back in with one’s parents has become more common in the last few years. Once they’re financially stable, millennials move into apartments and choose to pay rent instead of mortgages.
- Retirement – Falling back on Social Security, years of business and real estate growth, baby boomers were less concerned with 401k’s and IRA plans. According to BlackRock the average 401k balance for boomers is only $132k. Now more often than not, we see this generation taking on post-retirement jobs in order to continue paying the bills. Oftentimes millennials struggle with retirement savings because current financial necessities, like student loan debt, take priority. But they seem to be outpacing boomers saving an average 8 percent of their salaries a year so far according to a T.Rowe Price study. While baby boomers are much closer to retirement than millennials, banks can support the younger generation by encouraging and educating them on proper ways to save for their future by providing things like an approachable webpage with informative games and videos. Baby boomers would benefit from personalized financial plans to ensure a quick and efficient high yield return on their savings.
Millennials and baby boomers may have walked very different financial paths, but they actually have a lot to learn from one another. To help both generations make the most well-informed financial decisions, banks can assist them by supporting both of their different needs.
This is a guest post by David Lester. He is a finance lead at Brightworks Interactive Marketing.