While Blake Ellis’ recent CNN Money article touches on some great points, it seems to be missing the Millennial perspective. Let’s look at the plight of this generation and explore why we’re seeing different credit card behavior than in years past.
YOLO
Not every Millennial falls into this category, but there is a large number of us that are living for the moment and not concerning ourselves with the future. While at first glance this seems incredibly irresponsible, when you look closer at the desperation that fuels this mentality, empathy starts to build. This is a generation that feels absolutely hopeless. With gigantic monthly student loan payments, a less-than-ideal job market, and a sense of entitlement that was built up by our parents, we’re feeling more than deflated—we’re depressed. Why build a credit score when the thought of having enough money to own a house or even a car is downright unattainable? We’re living for today, because that’s all we have.
Emerging Adulthood
In the past, it was important for Boomers to build a credit score right out of college because they were on the fast track. In their 20’s they were settling into solid careers in a blossoming economy, had minimal student loan payments (if any), and were dutifully putting their extra pile of cash towards a down payment on a house. The youth of today that values the same things as past generations (which is definitely not all of us) finds ourselves way behind the curve. The step between adolescence and adulthood has stretched 10-20 years. For those of us that even want to buy a home someday, we won’t be financially or emotionally ready until we’re into our 40’s or even 50’s. It’s easy to see that Millennials are not in a huge rush to build a credit score because our goal is eons away. Instead, we’re focusing on what’s in front of us today—paying off our student loan debt and figuring out how the hell we’re going to scrape together the money for daycare.
Different Values
Millennials prefer living in walkable cities where public transit, a bike, or your feet can get you to work. While it would be great to own a home in one of these cities, the cost of housing is so astronomical that the only home we could ever afford would be miles outside of the city in some crappy suburb. With values shifting towards experiences over material things, there’s no real push for Millennials to build a credit score. By the time Millennials are finally ready to purchase homes anyway, don’t be surprised if you start seeing us pool resources with our friends to group buy, or save up cash to buy a 3D printed home for $5,000—in other words, we’re going to do things differently and skirt around the whole credit score issue all together.
Alternative Services
Millennials are wary of big institutions and more conservative with what little money we have. At the same time, we’re becoming adults in a burgeoning service economy – where different options on how to think about money are presenting themselves. Tools like Mint.com are helping us think in categories and make goals, online banks like Simple are helping us detach from the branch and track our spending. Traditional banks aren’t offering Millennials the support they need to “live for today.” It’s no wonder that we love prepaid debit cards so much – it’s one small way that we can manage our paycheck to paycheck struggle.
Instead of condemning Millennials as irresponsible or demanding that we adopt behaviors that pivoted on past generation’s values, maybe the financial industry should take the hint and start figuring out new ways to support us and what we value.
