Millennials are More Debt Conscious Than Ever Before – What Does This Mean For Service Providers?
The Millennial demographic is among the largest and most discussed in history, while in theory, this group such represent an attractive target for brands, businesses, and lenders across the UK.
Millennials are also arguably the most misunderstood demographics in living memory, however, with a recent study by the U.S. Federal Reserve seeming to suggest that the world’s youngest consumers are spending far less than previous generations.
We’ll explore this further while asking how Millennial’ mistrust of debt is also impacting the global lending market.
Are Millennials Really Spending Less than Their Parents?
The aforementioned study commissioned by the U.S. Federal Reserve was certainly insightful, as it revealed that Millennials spend less than Generation X thanks primarily to a fundamental lack of funds.
More specifically, it’s believed that the average Millennial household has a real net worth of $92,000 in 2016, with this figure approximately 40% lower than was boasted by Generation X families in 2001.
This number was also 20% lower than the typical Baby Boomer household in 1989, as Millennials continue to struggle with spiraling inflation and stagnant real wage growth.
This trend is also reflected in other developed economies across the globe, with Millennials in the UK spending minimal amounts on recreational expense as they continue to see their levels of disposable income decline.
How Is This Influenced By The Millennials’ Mistrust Of Debt?
Another key factor here is Millennials’ growing mistrust of debt and lending, particularly when appraising unsecured products from flexible and contemporary lenders such as Likely Loans.
This mindset is borne out by recent market trends, one of which has seen consumer borrowing in developed economies like the UK and the U.S. in the last 12 months. In the UK, for example, consumer borrowing has recently experienced its slowest rate of growth in nearly three years, coming in at a relatively minimal 8.5% in July.
This has undoubtedly influenced by the Millennials’ dislike of encumbering themselves with debt, with this demographic likely to favor large lending institutions and banks as opposed to smaller and medium-sized service providers.
But what does this mean for the global lending market and the growing army of smaller and flexible service providers currently in operation?
While the fact that Millennials’ are relatively resistant to the lure of debt and smaller lenders may be seen as a negative development in the market, it’s important to note that this demographic are motivated customers who want to invest in cars and real estate.
Additionally, the population explosion means that the Millennials represent the biggest adult demographic in the current market, meaning that the demand for diverse lending products is continuing to rise in relation to previous generations.
As a result, it cannot be denied that Millennials remain a vast demographic with a huge motivation to spend, despite the economic challenges that continue to confront them. What’s more worrying for lenders is the fact that Millennials appear to have a mistrust of smaller and medium-sized service providers, but this at least provides some insight to help them becoming more appealing.