Debunking The Myths About Gen Yers' Financial Lives

I collaborated with Oracle recently to do a webinar on the impact that Gen Yers will have on financial institutions’ marketing and technology capabilities. Part of my presentation debunked some commonly held myths about Gen Yers.

Myth #1: Gen Yers aren’t motivated by money.

As evidence of this myth, there’s an article from Insight Magazine which claims that “for Gen Y, money isn’t the be-all and end-all,” the Brazen Careerist has written that “Gen Y is not motivated by money…unless they’re in Sales,” and for good measure I found another blogger who reports that “in my experience, Gen Y is not motivated by money.”

Reality: Gen Yers no less motivated by money that anybody else. First off, every generation has its share of people who are highly motivated by money, and those who are less motivated by money. The views stated above — as I read them — are trying to imply that on the whole (i.e., a higher percentage of), Gen Yers are less motivated by money than members of other generations.

Hogwash. In research conducted by Aite Group, six in ten Gen Yers said that money is as important to them as it to their parents, and a quarter of respondents said it’s more important. Now it’s possible, of course, that someone could have said that money is more important to them than it is to their parents — and still not be motivated by money, if their parents are really not motivated by money. But the myth being propagated here is about the relative view of money on the part of Gen Yers — and the data simply doesn’t support the myth.

And as for the 15% who said money isn’t as important to them as it is to their parents: Just wait a couple of years until they get married, have kids, want to buy a house, a new car, need to save for kids’ college education, etc. Then let’s see how important money is to them.

Myth #2: Gen Yers don’t trust banks.

The San Francisco Business Times ran an article titled “Young adults don’t trust banks” (citing a study of Gen Yers commissioned by Microsoft) while Wallet Pop went beyond that to state that Gen Yers “don’t trust banks, don’t plan to invest in the stock market, and don’t even want to get insurance.”

Reality: Well, first of all, few people trust banks these days. Actually, to be more specific, a minority of people trust “banks in general.” This is an important nuance. In the consumer research that Aite Group has conducted on trust — we partnered with a French consulting firm that specializes in the practice of building business-to-consumer trust, and conducted the study in the U.S., U.K., and France — we found that while few consumers in the regions we surveyed said they trust “banks (in general)”, the percentage that trust their own primary bank is much higher.

And this is particularly true for Gen Yers. In fact, 45% of the Gen Yers surveyed said they trust banks (in general), in contrast to just 33% of older consumers. So myth debunked right there. This shouldn’t be surprising — older consumers have years and years of bad experiences with a lot of the different banks they’ve done business with. They’ve earned the right to be mistrustful. How much experience has a 23 year old had with banks in order to be so mistrustful?

But more importantly, about seven in ten Gen Yers said they trust their primary bank, compared to 73% of the older consumers who said the same. Not a big gap there. And that’s the type of trust that matters most — trust in the bank they do business with, not trust with some amorphous definition of banks in general.

Myth #3: Gen Yers don’t want credit cards.

At a conference I spoke at recently, a competitor of mine said “credit cards will become obsolete – Gen Yers will never adopt them.” US News and World Report, reporting on a book called Not Quite Adults, says the authors of the book found that Gen Yers “meticulously avoid credit card debt.”

Reality: In a study Aite Group conducted at the end of Q4 2010, we found that, indeed, Gen Yers are less likely to use credit cards than older consumers. Only about four in ten Gen Yers used a credit card to make a purchase in Q4 2010, compared to 50% of Gen Xers, and 60% of Boomers and Seniors. But four in ten is still a pretty significant percentage.

And furthermore, “meticulously avoiding credit card debt” is not the same as not wanting/needing credit cards. Personally, I avoid credit card debt as well (hey! I must be a Gen Yer! NOT). And I use a credit card for everything. The reason Gen Yers are less likely to use credit cards has nothing to do with some innate attitudinal difference. The answer is much simpler: They simply haven’t got to the point in their lives when they need a credit card.

When we asked Gen Yers who don’t have a credit card why they don’t have one, the most popular answer was “never had the need, but I anticipate applying for one in the future.” The second most popular answer was “no reason.”


There seems to be a desire among a number of folks — perhaps some Gen Yers themselves — to paint Gen Y as a generation not motivated by that evil evil thing called money, mistrustful of those evil evil people called bankers, and not enticed by that evil evil product called a credit card.

A romanticized view, but not a realistic one.

Here’s the reality about Gen Yers’ financial lives: 1) Money is important to all of this. More important to some than others, for sure, but that difference is not generational-based. Money is always going to be more important to someone starting/supporting a family than someone who isn’t.  2) Trust is tricky thing to measure. For the past few years, banks have been our whipping boys for the sorry state of the economy and financial crisis. It isn’t a generational thing. 3) As Gen Yers get older and their financial needs evolve and their credit scores improve, demand for credit cards will rise. That doesn’t mean credit card debt will rise to the level that previous generations took it to.

But here’s the reality for banks and credit unions looking to profitably acquire and keep Gen Yers as customers: New marketing and technology capabilities are needed. For that part of my presentation, you’ll have to get the deck from Oracle or check out the webinar when it’s posted on BAI’s site.

12 thoughts on “Debunking The Myths About Gen Yers' Financial Lives

  1. Ron,

    Agree. Although I think increasingly Gen-Y’ers are opting out of the banking system in all it’s forms because they are not dealt with efficiently. I don’t think they have a high tolerance for process and policy that frustrate engagement – do you have any data on this front?


  2. Ron,

    One of the downsides to the proliferation of information on the web and via social media is it is difficult for an analyst such as myself to determine what information is relevant, nice to know, or wrong. I appreciate your blog for bringing clarity to data.

    Further to your point, I’m a Gen Xer and according to conventional wisdom, I supposed to be lazy. Hah. Now let me wrap up so I can take a nap.

    Nice Job!

    ~ Jeff

  3. Brett: I can only speak to trends in the US, but I don’t see evidence that Gen Yers are “opting out of the banking systems in all its forms.” I do see higher use of non-traditional products — most notably, prepaid cards. But it’s really important to note that for the vast majority of Gen Yers who use prepaid cards they also have a checking account (although few write checks — they use the debit card). The biggest attitudinal difference I find is that older consumers are more likely to compartmentalize financial firms: banks are banks, brokerages are brokerages, insurers are insurers. And no one else is allowed in the financial services mix.

    To Gen Yers, the willingness to share their data, or do business with firms that aren’t strictly banks, brokerages, insurers (e.g., SmartyPig, etc.) is much higher. But I don’t see them “opting out” of doing business with traditional FIs.

    Jeff: I’ve never bought into the stereotype that Gen Xers are lazy. My own stereotype — based on the data I’ve collected and my own personal experience (my brother, some friends, etc.) — is the exact opposite. I find Gen Xers to be a helluva lot more responsible and industrious than Boomers.

    Of course, you may very well be an exception. 🙂

  4. I am left with one overarching thought. Gen Y is not much different than their parents or grand parents were at a similar stage in life. While not supported by data a big part of my gut instinct and generations of the past would lead me to conclude that they will become their parents as they grow older. They will not be some new phenominal group that will forever change the way things work. It a nice thought, but I don’t see it.

    Every age has thought themselves special. The 70’s folks that fought the establishment are now staunch Tea Party conservatives. Time cures everything. In just a few years Lady Gaga will just be a memory like the love beads and bell bottoms of the 70’s.

    This is great data and maybe I think so becauise I believe it supports my conclusions, but none the less the more things change the more they stay the same, at least in my world.

  5. Ron, great post and very insightful.

    One thing that I’m always amazed by is what people say they want, vs. how they act. I feel like this is particularly relevant for Generation Y because they are motivated by money, yet when it comes to day to day examples don’t necessarily realize or exhibit this trait. One example being ATM fees and while they may not want to pay them, they do anyway.

    Another example, an entrepreneur colleague of mine is running a rent processing business. 45% of tenants surveyed said they would pay their rent via credit card. After the fees, it ends up being hundreds of dollars a year to make 12 rent payments a year. But if you asked them, how important is money to you, they would still probably say very important yet despite showing actions that might demonstrate otherwise.

    This probably has more questions than answers, but I find this topic to be very interesting and thanks for shedding some light on this.


  6. One other quick follow-up and to point #3, the Credit Card Act changes may also be having an influence on how many Gen Yers can actually get a credit card compared to how many might want it. Just because they don’t have access yet doesn’t mean they don’t want it (i.e. limited marketing on college campuses, having a co-signor, or lack of jobs for young adults all leading to fewer cards being issued).

  7. Bryan: Thanks for commenting. Replying to your comments could be a report in and of themselves. And as a matter of fact, I have written a report on one of the topics — card-based bill pay (
    Interestingly, most of the consumers that want to do this are more (vs. less) affluent, and want to pay w/ their credit card to rack up points. They “want” to do this, but don’t because of the fees. The consumers that actually do it tend to be the less affluent ones, and they do it more as an “expedited payment” approach, trying to avoid further late fees, or more likely, having their service discontinued.

    So I’m not sure it’s a matter of how important money is to them as much as it is a reflection of their economic reality.

    What I’m really trying to rail against in this post is the often-romanticized view of Gen Yers as somehow being more impervious to the evils of money.

    To which I say: Don’t give me that do-goody good bullshit. (ok, so somebody else said that before me).

  8. Since I left my job at Verity, I’ve spent more time with people who fall into the Gen Y category and most of them are entrepreneurs who are obsessed with money. It’s interesting. Some of them are dropping out of college because it’s getting in the way of them getting out there and making money. I haven’t talked to them about their feelings about banks, but I do know they use credit cards and that they are desperate for loans to fund their biz ideas.

    Oh, and by the way, I’m Gen X too, and I AM pretty lazy. 😉

  9. Gen Yers are not as motivated by having money as their parents, just look at the decline in the rate saving in the US. Gen Yers are more motivated by material items such as the constant purchase of the latest technology. They still have to earn the money, probably a lot more then their parents, but Gen Yers are not as motivated to hang on to it!! Having savings used to be a badge of honor, now they are a sign of being risk averse, boring and generally uncool.

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