The generation born between 1981 and 1994, known as Millennials, is reaching maturity in an ever-changing and very complex world where new technologies set the pace with increasingly sophisticated financial products and services. Today young people are looking for new sources of financial education to ensure they plan their finances properly.
Millennials are an exceptional generation for many reasons. According to the study "Millennials & Financial Literacy — The Struggle with Personal Finance" by PwC and the George Washington Global Financial Literacy Excellence Center (GFLEC), in the United States, this sector of the population is better-educated, more ethnically diverse and more economically active than previous generations. However, the report states: "Millennials confront greater difficulties—including economic uncertainty and student debt—than those who came before them. As a generation carrying new personal financial responsibility, it is critically important for Millennials to be on a path leading toward financial security."
The 2008 global economic crisis was a setback for a generation about to enter the labor market, meaning that it was forced be austere when managing money. As a result, saving has become common among Millennials. According to the 2018 Informe Europeo de Pagos de Consumidores (European Consumer Payments Report) prepared by Intrum, 63% of this generation save for unforeseen expenses, saving around EUR 350 per month on average. They are careful with money, however, they are very focused on the present as the percentage of those saving for a home is just 21%, with only 17% saving for retirement.
This focus on the present could limit their future opportunities, which is why good level of financial education is vital. The report by PwC and GFLEC found that only 27% of millennials seek professional advice when saving and investing. So, if they are shunning traditional sources, how are young people learning about financial matters? There are a wide range of answers.
The Internet: It is the natural environment of millennials and according to a GFEC study, it is also where they feel most comfortable finding financial information. Comparison sites, forum recommendations and online financial content are some of the sources of information that can be accessed on the Internet.
Social networks: This generation trusts companies that appear on social media, it pays attention to user recommendations and is used to sharing the experiences it has had with companies of all kinds, including financial companies. According to the latest report by 21 Gramos and Nielsen—Marcas con Valores (Brands with Values)—Millennials use the Internet to find good customer service. Furthermore, 90% of Millennials would like brands to give them decision-making power, increasing their degree of involvement and participation with the company.
Mobile applications: This is the most common way in which Millennials monitor their finances and to communicate with their bank. The Informe Anual sobre Millennials y Generación Z (Annual Report on Millennials and Generation Z) by Smartme Analytics evidences this by stating that the use of finance applications among Spanish millennials grew by 20% in 2018.
Artificial intelligence: Millennials who care about their finances and seek out advice have discovered robo-advisors — online allies that meet their needs. These financial advisors provide online advice and manage investment portfolios using algorithms, they also offer immediate and up-to-date information at any time and place and enable users to tailor their portfolio. According to Accenture's study "Millennials and Money" 67% of young people see robo-advisors as an efficient, low-cost source of financial information.
Among other topics, the next edition of the Edufin Summit 2019 will discuss technology as a way of improving financial health. This year the annual summit organized by the Centro para la Educación y Capacidades Financieras (Center for Financial Education and Capability) will be held in Madrid on July 11 and 12. Leading experts from the sector will attend this international gathering to discuss current issues such as new technologies, digital financial education and progress being made in the banking sector, among other topics.
Anyone who would like to attend can do so by registering using this link.
Other interesting stories