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Millennials and managing money


February 2015

While millennials have been labeled with negative stereotypes like materialistic and entitled, the reality is that crippling debt and lack of employment opportunities have significantly impacted this generation’s financial future.

"Millennials are struggling with student loan debt," acknowledges Brian Behl of Lake Country Wealth Management in Delafield.

With the average college graduate in debt nearly $30,000 upon graduation, getting ahead is very hard, says Karen Ellenbecker, founder of Ellenbecker Investment Group. "Unfortunately, it’s preventing some people from taking on good debt like buying a home."

So how are millennials managing their debt and still saving for major financial milestones like homeownership and retirement? "They’re doing everything later," says Ellenbecker. "They’re buying homes later, getting married later and having children later."

Although their disposable income may be more limited, other factors like social responsibility and the environment are shaping how millennials spend money.

"Millennials are more concerned about their quality of life right now," says Ellenbecker. "They’re willing to save less so they can buy locally grown or humanely raised food."

Behl agrees that millennials’ spending habits look very different than a generation ago. They think nothing of paying for technology services like cell phones and Internet.

"It’s just the norm," he adds.

Despite their willingness to pay more for higher quality, Ellenbecker says millennials also recognize their financial resources are limited. As a result, they are becoming more frugal. "They’re more conscientious of their spending," she says.

Although this group is striving to live within their means, budgeting and saving money is easier said than done.

"Many millennials are just trying to make ends meet," says Julie Ellenbecker-Lipsky of Ellenbecker Investment Group.

Behl recommends millennials seek professional advice early to help get a handle on their finances. In fact, many financial planning firms today are reaching out to clients’ adult children to educate them about sound investment practices.

"We’re seeing the difference that a multigenerational approach can make," says Ellenbecker.

Despite their comfort using online technology for financial transactions, millennials still want face-to-face contact with the people who manage their money. "You’d think this age group wouldn’t be interested in meeting with financial advisers in person, but they are," says Ellenbecker.

If anything, she says establishing a personal connection is more important than ever. "Millennials are much more conscientious about who is helping them provide for their future," says Ellenbecker. "They really check things out, interviewing advisers and researching services."

Banking On the Go

Now that mobile devices have become part of our daily routine, people are expecting more functionality from mobile banking apps like mobile check deposits, real-time updates on account activity and balances, and alerts to help avoid overdraft fees.

"The current generation does so much personal banking online," says Karen Ellenbecker, founder of Ellenbecker Investment Group.

Ellenbecker, who is a member of the Foundations Bank board, says regional banks are joining national financial institutions in the mobile arena with their own mobile check deposit and banking apps.

"People are doing deposits directly from their smartphones," she says. "They take a picture of their check, submit it and they’re done."

Julie Ellenbecker-Lipsky of Ellenbecker Investment Group says online banking is particularly appealing to people who want flexibility and convenience to bank anywhere, anytime. "We are no longer limited by conventional banking hours," she says.

Online banking also eliminates paper waste, which is a plus for environmentally conscious millennials.

Even though traditional banking services like deposits and withdrawals have largely moved online, customers are still visiting local bank branches to carry out more complex transactions.

"People still like to know there’s someone they can talk to about bigger things like home loans and lines of credit," says Ellenbecker.

But perhaps the fastest growing personal finance apps today are digital wallet apps like Apple Pay and Google Wallet, which allow consumers to pay for purchases with their smartphones.

"People carry very little cash now," says Ellenbecker. "They’re driven by their debit cards."

While consumers today are carrying less cash, they’re never without their cell phones, says Betty Wellhoeffer Hill of Crescendo Wealth Management. Not only is shopping with a digital wallet convenient, it’s more secure and enables consumers to track their spending online.

"Using personal finance apps can help you become a better money manager," says Hill.

Mobile wallet apps can also be used to store and redeem electronic coupons and loyalty card information.

"People are all about their loyalty points," says Ellenbecker-Lipsky.

This story ran in the February 2015 issue of: