We all know the hot buttons for baby boomer members when it comes to retirement and savings: “Future,” “grandchildren,” and “nursing home.”
But when it comes to generation Y, things change. The term “gen Y savings” is an oxymoron. Typically overspending and undersaving, this particular group has more in common with sailors on an annual shore leave than with anyone saving for any financial goal.
Unconvinced? Consider that 60% of gen Y workers cash out their retirement savings plans when changing jobs, according to PLANSPONSOR magazine.
|James Collins is Credit Union Magazine's humor columnist.|
While this is definitely bad news for gen Y, it’s also a threat to credit unions, as this lack of savings is bound to have balance sheet ramifications in the future.
The trick is to try to change their behavior. As a parent of three gen Yers, I maintain you’d probably have better luck hand-feeding a pack of wild wolverines. But as they say, “Youth and talent are no match for age and treachery.”
Here are seven ways to approach the gen Y behavior-changing effort:
1. Take advantage of their weak math skills by offering accounts that pay higher interest on part of the balance. With 45% of gen Yers having no savings account, one big problem is they don’t have anywhere to save, according to moneyrates.com. At O Bee Credit Union, we offer (with e-statement and automatic deposit) a high savings rate on members’ first $500, and a normal rate thereafter.
2. Promote automatic savings like the popular “keep the change” programs or automatic deposits. No check register? No problem. Since gen Yers never balance their accounts, such “back office” savings activity probably will go unnoticed.
3. Avoid mixed messages. Are you telling gen Yers to save and at the same time offering them your latest credit card? This might be confusing to their inexperienced minds.
4. Give them text banking. Most mobile platforms require the phone user to have an expensive data package, something a frugal gen Yer might drop. But text messaging—as my own daughter exemplifies by doing more than 2,000 a month—is a necessity.
5. Use their language, not yours. Don’t call it a “savings account.” It’s their “car (when I finally save up $3,000) account.” Remember, savings is something their grandparents did back in the day. Focus on the why, not the what.
6. Guilt their parents. What’s the No. 1 thing parents wish to avoid after their gen Yers leave the nest? Gen Yers coming back. Use that—wisely.
7. Buy acceptance. Face it: Advertising doesn’t work. Gen Yers trust others’ experiences—not a list of awards, survey results, or advertising promises. Find your supporters and encourage them to post their experiences. As long as they’re genuine, you’ll be buying trust.
Credit unions have a special responsibility with this special generation. Why? Because, frankly, we have a purpose beyond profit—a value especially cherished
by those of this generation.
Gen Y consumers:
Just be careful feeding them.