Adjust Your Credit Union’s Financial Solutions to Help Millennials

Millennials. We’re the generation of people born between 1981 and 1996. We’re a large group – by 2019 millennials are projected to number 73 million, surpassing baby boomers as the largest living adult generation, according to the Pew Research Center.

I’m sure you’ve seen stories about us in the news – sometimes we’re called creative and innovative, and sometimes we’re called lazy. The narrative changes weekly. Regardless, the one thing a lot of us (mostly those born in the 1980s) seem to have in common is that our finances look much different than those of our parents. We came of age during the Great Recession, a time of economic disparity for the entire country, which has made it hard for a lot of us to get ahead.

Need proof?

“The 1980s cohort is at greatest risk of becoming a ‘lost generation’ for wealth accumulation. Wealth in 2016 of the median family headed by someone born in the 1980s remained 34% below the level we predicted based on the experience of earlier generations at the same age,” according to a report from the Federal Reserve Bank of St. Louis.

The report went on to say that many families in the youngest group they studied – respondents born in the 1980s – are at substantial risk of accumulating less wealth over their life spans than the members of previous generations. “Not only is their wealth shortfall in 2016 very large in percentage terms, but the typical 1980s family actually lost ground in relative terms between 2010 and 2016, a period of rapidly rising asset values that buoyed the wealth of all older cohorts.”

Here’s another fun fact: “When millennials were born, tuition at public four-year colleges was just $3,190 per year (adjusted for inflation). By the time they grew up and enrolled in college, tuition rose 213% to today’s cost of $9,970 per year,” according to Student Loan Hero.

None of this is surprising to me. In the highly-educated area of Washington, D.C., where I currently reside and where you might expect millennials to thrive – and many do – debt seems to also be a huge problem for many of my peers.

Despite making decent salaries, many of my peers have so much student debt that home buying has been challenging or simply out of reach for them. It’s common for people I know to tell me they have $50,000 in student debt, or sometimes even $100,000 if they have a master’s or another advanced degree.

Why should this matter to credit unions? The financial solutions that worked for past generations may need some adjusting in order to manage the complex financial needs of millennials. And if your credit union can succeed at that, it could be a huge area of potential growth.

Here are a few other challenges facing our generation:

• Generations before us tended to stay at jobs for a long time, accumulating pensions and decent retirement plans in the process. This isn’t the case with millennials.
• Many of us are taking care of aging parents or other relatives. According to AARP, there are 40 million family caregivers. Of those, one in four is a millennial. “Almost three in four millennial family caregivers are employed, and they are more likely than other generations of caregivers to be working. One in three employed millennial family caregivers earns less than $30,000 per year.”
• Housing prices are much higher than they were for previous generations. “In November 2017, real estate website Zillow showed that the median home value was a whopping $205,100. Compared to what baby boomers might’ve paid in 1980, that’s a 39% increase. And compared to the homes in which the silent generation grew up, you’re looking at a nearly 300% higher price in today’s dollars,” according to Home Loan Hero.

So how can credit union financial advisors help millennials? Do what we do: Get creative with your approach and think outside of the box. Standardized approaches may not work as well with us because of the complexity of our financial futures.

For example, I recently bought a fire stick and cut my cable – saving me $75 a month – and I still get to watch all my television shows, just not live anymore.

I also have a full-time job and part-time job (with CU Times) to help me better plan for my financial future. I’m able to save more, pay off my student loan debt more quickly and splurge a bit on travel.

Raya Reaves, a financial coach and founder at City Girl Savings, offered these savings tips:

• Use an app to save without much thought, like Digit.
• When shopping for produce, buy only for the week ahead. Wasted food is a huge, unnecessary expense.
• Refrain from storing your credit card information on apps or websites. Physically entering your information each time may cut down on impulse buys, and it’s also safer from a security standpoint.
• If you’ve been a long-standing customer with your insurance, cable or cell phone companies, call and ask for a discount. You can also ask your credit card companies for a lower interest rate. Asking never hurts.
• Investigate which free perks come along with your credit cards, such as extended warranties or insurance on car rentals.
• Pay off debt with passive income. If you have the opportunity to rent a room, start a blog or create digital products, then take advantage of that – these are all great ways to build passive income.

These are just a few examples of tips that can help millennials prepare for their short- and long-term financial futures. What worked for previous generations simply may not work for us, and we all need to adjust our strategies in the process, including those who serve millennial credit union members.

Tahira Hayes is a correspondent-at-large for CU Times. She can be reached at thayes@cutimes.com.