How Do You Pay?
There are countless ways the generations differentiate themselves from one another. Of course, we have the entertaining spats between Millennials and the Boomers, but there are also differences in cultural values, politics, and attitudes towards education to bring a few to the surface; however, one of the overlooked but interesting aspects is money management. Who knew payment method preference would play such a significant role in behaviors.
Roughly 3 out of 10 adults don’t use paper money at all — and 76 percent carry less than $50 at any given moment.
Cash took an expedited exit from our typical method of payment due to the pandemic. As a result, contactless payments became a real-life necessity. Paper money is excellent because it is convenient and saves time instead of waiting for transactions to be approved. But, on the flip side, you’re losing change in the couch cushions and the laundry, paying ATM fees, and then my dreaded chore, actually physically going into a branch to make a deposit.
It’s no surprise that shoppers love and gravitate towards other payment methods. Therefore, it is interesting to look at how each generation changes the norm in some shape or form.
When it comes to financing, boomers and millennials love to duke it out. Platinum is more on the side of what we can learn from their habits and preferences. So who’s side are you on?
How seniors like to pay
The retired community uses all methods of payments, but they are the largest group to go for American Express (Amex) and paper checks. Amex has a big draw to high-income earners with an appeal of prestige, with a downside of limited acceptance, especially compared to other card brands.
68% of people over the age of 65 prefer snail mail VS email. The same thing applies here, checks VS electronic payment forms (what they’re used to and change is hard). So they are opting for something that works and they trust. The downside is this adds the cost of ordering checks, stationery, lost in the mail situations, and the increasing cost of a stamp.
Generation X: Late 1970s-Mid 1980s
These kids grew up in an economic environment geared toward specialization in education and a high drive to become professionals. As a result, Gen X was willing to invest in themselves with college degrees while having a more conservative financial budgeting than the Baby Boomers.
The Generation X crowd gravitates towards credit cards, making sense since they came of age during the golden years of the credit card boom. They were the driving force behind the “swipe-and-sign” culture of the 1970s and 1980s.
Many from this same group sometimes find the “dip-and-PIN” culture of EMV chip cards a bit confusing, making the allure of credit cards easier to understand. However, the longer credit histories are a significant benefit for them, especially those in the higher income bracket who can use a line of credit to keep up with their expensive buying habits.
Millennials or Generation Y: Late 1980s-Mid 1990s
Millennials follow suit with a hybrid of Gen X and Boomers’ money management styles. They see that Gen X grew up with well-paying jobs almost impossible to obtain without a college degree and fear education debt. But, on the other hand, they are like the Baby Boomers where they are willing to spend money to live in comfort. This created a more positive view of debt in this generation with the popularity of same-day / payday loans and other relatively commonplace loans.
Why the Habits?
It is fascinating to see some differences in preferred payment methods and fun to see where the trends take us. Being a product of our environment applies to money management as well. If you consider it, it’s not just traits of an age group culture but also how the economic and historical climates shaped their views.
Technology that advances every day combined with the rapid changes in the economy significantly impacts how each generation views money and what they prefer for payment methods. Those born in the 1980s and early 1990s have the most flexibility in their payment preferences. They grew up with credit cards and checks — but are young enough to understand the draw towards digital eCommerce methods like PayPal, mobile payments, and online shopping.
One surprising trend is how the Millennials age group leans more towards prepaid cards (LINK PREPAID VS BLOG). It may seem like a hassle to refill the card, but most Millennials lack the credit history to qualify for traditional forms of electronic payments.
Generation Z: Mid-1990s-Early 2000s
Generation Z is still in the early stages of its members entering the market, so their profile doesn’t have much data. However, it’s following a mixture of Gen Z’s stress about debt and college tuition. This generation also went through their family and friends in the recession of 2008, which has them watching their financials to avoid overspending and going into debt.
On the flip side, they are the generations willing to spend more on goods and services. They view debt in a very negative way but also have a love for consumable goods. Coming as a surprise to no one, the younger generation gravitates towards electronic payment forms like mobile wallets, NFC, and eCommerce. They grew up in the digital age and expect technology to continue to improve speed, personalized experiences, and loyalty rewards programs.
Baby Boomers: 1946-1964
Baby Boomers were born and raised when the economy was strong. As a result, their parents were wealthier than previous generations, most likely due to the Great Depression. The habits that they followed to cut expenses were passed on to the Boomers. This allowed them to have more financial freedom and have excellent living standards while having suitable employment without a college degree.
What do you think? Agree or Disagree? Let us know in the comments.