Generation thrift goes back to the future
2 June 2016
Young people 21-and-under are saving more than any other generation, embracing the austerity values of their grandparents.
This was the main finding in an ING study, Money Attitudes of a New Generation, conducted with Professor Noreena Hertz of University College London. It revealed a major generational shift in financial attitudes of Generation K (14-21 year olds), as the children that lived through the financial crash of 2008 reach early adulthood.
The study came from a 2000 person survey conducted in the US and the UK in 2015 as well as from a series of one-on-one interviews and two focus groups in 2016.
Concerned about their economic future and fearful of debt, focus groups with 16-18 year olds revealed that all respondents are actively saving for the long term and are reining in short-term spending.
Comments about being “independent” and the need to be “self reliant” were typical among respondents, reflecting a collective belief that they can’t rely on others for their financial wellbeing.
The study found almost three quarters (72%) of 18-24 year olds believe that young people have a more uncertain financial future than older generations did when they were young.
Debit not credit cards
Revealing an unprecedented level of anxiety, almost three quarters of 14-21 year olds (72%) worry about being in debt – and not in relation to just student loans, but also in regard to cars and mortgages.
Mindful of the consequences, the second-era millennials (the first era are now between 21 and 30 years of age) are very conscious of their spending and are more likely to use debit rather than credit cards in order to help manage their finances.
These early to mid-20th century attitudes to saving and thriftiness are matched by a very 21st century approach to banking, with young people beginning to bank exclusively via mobile devices, which they say helps them gain financial control.
This is a sentiment that is in keeping with 85% of adults in Europe, who list mobile banking as one way of helping to improve their money management.
ING chief economist, Mark Cliffe said: “This young generation grew up in the midst of the challenges of the financial crisis, but they are also smartphone natives. They are therefore uniquely positioned to take advantage of fintech innovations that are coming through to help them make smarter decisions.”