By Jeff Meyer
Millennials control more than $200 billion in direct purchasing power, and are estimated to deliver a mortgage market of $900 million in the next year, with another $700 million in auto loans.
The purchasing influence millennials bring to financial products and services is changing how institutions, including credit unions, attract and capture this emerging target market.
Despite what is written in the media, only one in seven millennials is single, childless, and living at home with their parents. In fact, millennials are laying the foundation for their adult lives. According to CUNA Mutual Group’s What Matters Now Research, this highly-coveted generation is comprised of more than 80 million individuals between the ages of 18-34 and has surpassed Generation X as the largest generation in the workforce – accounting for one out of every three workers. Thirty percent of millennials are over age 30, nearly half (46%) are parents, and 57% own a home.
However, this generation has concerns about their financial futures due to being saddled with their share of substantial debt obligations. Approximately 70% of millennials carry debt – averaging $52,120 with 50% being non-mortgage debt – and 60% report living paycheck-to-paycheck with two-thirds worrying about financial security on a daily basis.
How To Help Millennials
Despite these challenges, credit unions can help millennials protect today and prepare for tomorrow by offering and educating this generation about payment protection products.
Payment protection products, such as credit insurance, debt protection and guaranteed asset protection for auto loans, help to ensure members can cover their monthly loan payment responsibilities should the unexpected occur. At an age when rainy day funds may not yet be fully established, payment protection products can help fill a critical financial gap in a millennial’s time of need.
These products help new college graduates and young professionals prepare for unexpected costly auto shop visits and accidents that may leave auto loan borrowers owing more than what their vehicles are actually worth. And, they can educate first-time homebuyers how they can protect their biggest financial investment if tragedy should hit.
Helping guide millennials on their path to financial security establishes long-lasting financial partnerships. Startling numbers reveal only 8% of millennials were able to answer basic financial literacy questions4. Although, 84% indicate they would value advice when it comes to financial decisions. However, only 14% of millennials use a credit union for their primary account and only 25% have a credit card, investment or loan through a credit union. And the number one reason millennials report that they don’t use a credit union? They don’t know much about them.
Opening The Door To Conversations
This opens the door to conversations where credit unions can illustrate the value payment and income protection products can provide. These policies protect the financial security that millennials are working so hard to build, and like most insurance, the policies are often easier to obtain and more affordable to people while they’re young. Start these conversations now to help millennials protect today and prepare for tomorrow.
Jeff Meyer is the vice president of lending product management for CUNA Mutual Group. He can be reached at Jeff.Meyer@cunamutual.com.