When two separate card companies come out with studies about the fiscal habits of twentysomethings in the same month, it’s time to ignite a trend alert.
Chase, with its sleek Slate charge card, released a study this month positing, “Young adults (ages 18-34) are most likely to want to save more and spend less money, pay down debts, and develop a budget in 2011 compared to others.” Of course, the Slate card, imbued with something called “Blueprint,” is supposed to help.
While Slate acts as most credit cards do (i.e. charges you interest on balances: anywhere from 11.24 percent to a hefty 22.24 percent), Blueprint is an online program that allows you slice and dice figures to compute different ways to pay for those balances.
Meanwhile American Express, with its Gen Y-focused ZYNC card, just released a survey of young adults which found nearly eight in ten (79 percent) of respondents describe being “overwhelmed with their current financial situation,” and more than half (57 percent) of those surveyed indicated they are “still financially dependent on their parents and other family members to pay bills.”
The study kicked off what American Express/ZYNC is calling its “Quarterlife Project,” which includes offering up Gen Y life coach Christine Hassler on the ZYNC Facebook site to answer questions.
ZYNC is a charge card that requires a monthly pay off, versus a credit card that allows you to accumulate debt; it might actually be a good tool for young people to use to build a credit score without getting in trouble. It features flashy colors along with theme packs such as music, style and restaurants that you can add on for an additional fee in an attempt to grab the attention of the market demo.
Developing personal finance products aimed at twentysomethings is smart thinking. Both card companies’ polls show that this age group is hungering for it, as does independent investigation.
A robust 2010 Pew Research Center study, “Millenials: A Portrait of Generation Next,” shows that Gen Y is concerned about their financial health — and they should be. The Pew study reports that a majority of 18- to 29-year-olds (55 percent) say they are watching their spending “very closely” these days, up from 43 percent of 18- to 29-year-olds who shared that view in 2006. Additionally, the study reveals, “They are the least likely of any generation to own their own home (22 percent vs. 71 percent for adults ages 30 and older) and, like most Americans, a majority worry that they aren’t saving as much as they should. ”
“I think anyone in their 20s and 30s who went through this is going to be a lot more conservative, suspicious and careful then they ever would have been before,” says financial writer Liz Weston, author of “The 10 Commandments of Money.” Weston points to student loan debt as a leading cause for concern.
Hassler, the Gen Y life coach American Express has brought aboard for the Quarterlife Project, says the change in the economy echoes loudly for Millennials. “The biggest thing this generation of twentysomethings is dealing with that previous generations haven’t is the reality versus the fantasy they expected. They grew up during a strong time, they grew up being told to follow passion and money will come,” she says. “When they come to this economy dealing with a challenging job market, it wasn’t what they were promised. So they’re not only having to adjust their finances and spending behavior, but also their expectations.”
Jazmine Harnishfeger, a 25-year-old band teacher in California and Hassler client, agrees with that assessment. “I was under the impression that if I went to college and got a job, money wouldn’t be a problem,” she says. “A college degree is the new high school diploma — everyone has one.” She finds herself now holding down multiple jobs, going for a master’s degree in-between work hours and retraining herself to live with a lot less than when she was under her parents’ roof.
One Hassler connection who is topping out the twentysomething demo is 29-year-old Alexandra Friedman from Denver. Friedman is living the dream with her own home and a steady job, but says she’s concerned about her many acquaintances so scarred by economic upheaval that they do the modern version of burying their money in the backyard: they pay for everything in cash. “They won’t use a credit card at all. Not only do I find that weird because they’re not able to build up their credit, but also because using cards help you learn a lot about your financial patterns—you can monitor it and see where your money is going,” she says. “If you’re just using cash and you’re not recording it, you can still be damaging with your finances.”
Seems like Chase and American Express are onto something.
American Express, with its Gen Y-focused ZYNC card, just released a survey of young adults which found nearly eight in ten (79 percent) of respondents describe being “overwhelmed with their current financial situation,” and more than half (57 percent) of those surveyed indicated they are “still financially dependent on their parents and other family members to pay bills.”