Motivations & Challenges Characterizing Millennial Approaches to Personal Finance

  • QA


    Strategic Insights Manager

Motivations & Challenges Characterizing Millennial Approaches to Personal Finance


Using Digital Ethnography to Explore Millennial Finance Experiences

MDRG recently conducted a digital ethnography study to explore the motivations driving millennials to seek out financial literacy, and the challenges they face in attempting to manage their financial lives.

Millennials are increasingly accumulating wealth as they progress through life. However, as a generation that greeted adulthood during a recession and has accumulated greater student debt than any previous generation, this group faces a unique set of financial challenges. This personal story shared by a respondent on Reddit represents some of the key motivations, challenges, and strategies that characterize Millennial approaches to personal finance:

    My SO [significant other] and I started with 100(k) in student debt out of college. I was a psychology major, and he was an art major. My first job out of college was for 30(k) as a receptionist. He was working manual labor for 20(k). I remember feeling so down because we didn’t make a lot of money right out of school. Rent is high where we live. We acquired some credit card debt. Life was tough. At the end of the year, we got a roommate to help offset the cost of rent.

    The second year, I found a better paying job for 40(k) in HR. He also found a better paying job for 30(k) doing graphic design. We started throwing money at the loans. Felt some momentum going because we were living very frugally. Saved up some money for emergencies. I opened an IRA, and started contributing to my 401(k).

    This last year I got promoted to 50(k). He found a better job for 50(k) at an actual design firm. We are on track to finish off everything before 2019. Still chugging along. Haven’t taken a vacation since ever, still living frugally, and now also planning a wedding. Still living with the roommate. Meal prepping. Only shopping sales. But very happy and content with our lives. Even though it has been hard, we look back and see how far we have come. Still got a long way to go.
    – Reddit

Methodology and Findings

To understand Millennial finance motivations and challenges, we collected and analyzed comments and posts like the one above. We focused on posts with activity on Facebook, Twitter and Reddit during July and August 2017.

Millennial Financial Motivation Findings

We found online activity indicating that Millennial priorities, goals and challenges depend strongly on their life stage and socioeconomic status. They strongly prefer for financial information to be personalized according to their incomes, living expenses, debts, goals, and aspirations in life.

Millennials at earlier life stages are more likely to feel pressured to better understand personal finance if they are facing financial challenges, whereas more affluent Millennials tend to approach the topic of personal finance later in life.

Many Millennials are challenged by an inability to resist compulsive purchases, a lack of confidence in their abilities, not knowing where to start with financial literacy, and feeling like they are starting their financial journeys at a disadvantage.

Millennials tend to seek out financial literacy when they experience negative external disruptions (e.g. loss of job), positive external disruptions (e.g. promotion), and slow-building internal phenomena (e.g. accumulation of debt). They also seek out financial literacy when they are looking to advance in personal journeys, especially if they anticipate significant life events.

These different motivating circumstances compel consumers to seek out different kinds of financial advice – someone experiencing slow-building internal phenomena is interested in making a change, whereas someone experience a negative external disruption is looking for a way to minimize change. Though these circumstances might give them the push to get started, consumers ultimately seek out financial literacy to understand how to transform money into something meaningful: a sense of stability, a feeling of autonomy or freedom, status and leisure, or reciprocity and trust with others.

Final Musings and Further Reading

Millennial financial priorities, goals and challenges depend strongly on their life stage and socioeconomic status. Consumers are motivated to increase their financial literacy when experiencing major life events or looking to advance in personal journeys. However, they face internal struggles around inadequate financial literacy. Financial institutions have the opportunity to build confidence within millennials with personalized offerings and services.

This project is not meant to stand as a comprehensive review of millennial experiences of personal finance, but does serve to demonstrate the foundation of knowledge that can be gained through digital ethnography. As a form of exploratory research, digital ethnography allows us to become familiar with specific groups of people and identify analytical themes of interest that can inform subsequent research.

For further reading on MDRG’s financial insights and digital ethnography:

  • We elaborated about our millennial financial motivation research in our Financial Literacy Whitepaper.
  • We also further explored the relationship between millennials and banks to learn how financial institutions could better connect with millennials.
  • MDRG previously used digital ethnography to better understand healthcare experiences. We wrote about a blog post about it here.

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