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How Millennials Spend (And Manage) Their Money

By Stephen Sellner | Citizens Bank Staff

It’s hard out there for millen… — rather, this generation of consumers. Everyone’s got an opinion about you and most aren’t afraid to share it. Those of you not born between 1981 and 1996 probably have some preconceived notions about this generation.

But how much does society actually know about you mil***nials? And how much do you know about yourselves? Citizens Bank recently gathered not-entirely-scientific-but-still-enlightening data to learn more, particularly about how you spend money and handle your finances. And no, not all of it supports your avocado obsession.

Check out the findings below; then, learn what it all means from Brendan Coughlin, Citizens Bank President of Consumer Deposits and Lending, and an M-word himself.

Different outlook on credit

Why do mil***nials use their credit cards more than other generations? According to Coughlin, there are two reasons:

  1. To redeem rewards that can fund life experiences, such as travel, or
  2. They don’t have the cash, thanks to cash-flow challenges caused by student loan payments.

Technology and convenience are big factors, too. Credit cards can be used regularly on everyday expenses, then conveniently paid off while on the go.

“You don’t have to go home, get a statement from your credit card company, write a check, put a stamp on an envelope, and mail it in like previous generations,” Coughlin said. “You can just do it with the touch of a fingerprint.”

Accessibility is king

It’s so easy for M-words to access their financial documents these days. It’s no wonder that more than three-quarters know their credit score. Tasks like getting your credit score and creating a budget used to be a hassle. Today, all that information can be accessed and created at the click of a button.

“All the capabilities around millennials allow them to be more engaged with their finances,” Coughlin said. “One of the reasons prior generations fell short of their desire to be more engaged was the significant time commitment required. This generation doesn’t have to make any trade-offs in their lives about that time management because it’s just so easy.

“What it means for banks,” he continued, “is we need to provide them with this real-time information about how they use their money much more nimbly than we’ve had to do for prior generations that weren’t as engaged.”

Thanks to smartphones, M-words are better suited to regularly interact with their finances.

The takeout trend

It’s no secret this generation likes to order takeout, and the data supports that. Does Coughlin expect that to continue? Well, yes and no.

Life milestones like having children and moving to the suburbs tend to result in more home-cooked meals. So while mil***nials today are living in major metros and staying there longer, Coughlin said it could hit a maturation point when these people do move to the ‘burbs, even if it’s delayed by a few years.

Still, now that more homes are becoming dual-income households where both parents work, takeout options could still be relevant alternatives when this generation is crunched for time and needs to put dinner on the table. That’s especially true as services like Uber Eats and Grubhub push “going out to eat” into a different space.

“In the past, your dinner choices were to cook a meal, go to a restaurant, or order pizza,” Coughlin said. “Now, the quality of food that you typically had to go out to eat for is able to be delivered to your house with the click of a button. That could really sustain the trend for quite some time.”

What’s the future of car ownership?

Will M-words usher in a generation where owning a car is a thing of the past? Not so fast, according to Coughlin. He expects the automotive industry to pivot toward driverless cars and ride shares, but it could be a number of generations before owned cars are off the roads.

“There’s a lot of steel on the roads,” he said. “And when you really dig into the analytics around car ownership, for that dynamic to completely turn over across the country is going to take a long, long time. It needs to be financially feasible for people before it will happen at scale.”

Furthermore, while this generation uses ride share services at a high rate, they still feel the need to have a car of their own.

How you pay today (and tomorrow)

Coughlin has bad news for check and cash lovers: they’re dying ways to pay. That’s not a shock to mil***nials, especially with the adoption of peer-to-peer payment services. But there’s another payment method that Coughlin has his eye on.

“Does physical plastic, like debit and credit cards, survive?” he asked. “If you virtualize the way you pay, through your phone or watch or whatever, do you actually need a card in your wallet? Or can you digitally pay anywhere?”

The adoption of phone payments has Coughlin wondering how much longer debit and credit cards survive.

The movement away from plastic could be 5-10 years away, but it’s something to be ready for. Coughlin sees a day where you walk into Best Buy, pay for your items, and up pops three payment options on your phone:

  1. Pay with money you have in your checking account
  2. Pay with your credit card
  3. Finance your purchase over 12 months

“You can decide on the spot how you want to pay,” Coughlin said.

What to remember

For all that’s said about you millennials, Coughlin is incredibly optimistic about your spending habits.

“I think the engagement and the accessibility to money in real-time set this generation up to be much more optimistic around being successful,” he said, “and managing their finances and money in a way that no other generation has had the ability to do before.”

That’s not to say you M-words don’t have your work cut out for you — hurdles like student loan debt aren’t going anywhere. “But there’s a lot to like about how this generation is set up for financial success long term,” Coughlin said.

More information

Now that you know how you spend your money, it’s time to develop a plan to make the most of it! Stop in for a Citizens Checkup at your nearest Citizens Bank branch to get your finances in order, for today and tomorrow.

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