As the financial landscape continues to evolve, credit unions must stay attuned to the changing needs and behaviors of their members. One of the most significant shifts in recent years has been the way younger generations—specifically Gen Z and Millennials—approach saving.
Unlike their predecessors, these generations are navigating a unique economic environment shaped by rising living costs, high levels of debt, and rapid technological advancements. For credit unions, understanding these shifts isn’t just beneficial—it’s essential for long-term success.
Savings Priorities of Gen Z and Millennials
When it comes to savings, Gen Z and Millennials have different priorities compared to older generations. According to Plinqit’s “State of Savings 2024” report, a substantial 47% of Millennials and 43% of Gen Z are primarily saving to pay off debt. This is in stark contrast to Baby Boomers and Gen X, who are more likely to prioritize retirement savings. The difference in priorities reflects the financial realities these younger generations face, such as higher student loan burdens and a desire to achieve financial stability earlier in life.
While travel and emergency funds also rank high on their list of priorities, the focus on debt repayment highlights a shift towards financial prudence among younger savers. For credit unions, this presents an opportunity to develop products and services that cater specifically to these needs, such as low-interest consolidation loans or automated savings plans that target debt reduction.
The Impact of Economic Factors on Savings Behavior
The economic landscape in which Gen Z and Millennials are coming of age is vastly different from that of previous generations. Persistent inflation, coupled with high-interest rates, has made consistent saving a challenge. The report highlights that the personal savings rate has fallen to just 3.6%, the lowest in over a year. This decline is a clear indicator of the financial pressure many young adults are experiencing.
However, despite these challenges, younger generations are not abandoning their savings goals—they are simply adjusting them. The focus has shifted from traditional long-term goals, like homeownership, to more immediate concerns, such as paying off debt and saving for short-term needs. Credit unions that recognize this shift and offer flexible, adaptive financial products will be better positioned to support their members through these economic challenges.
Savings Methods and Preferences Across Generations
Not only do Gen Z and Millennials have different savings priorities, but they also favor different methods of saving compared to older generations. The “State of Savings 2024” report reveals that younger generations are more inclined to use non-traditional savings vehicles. For instance, 14% of Gen Z and 16% of Millennials are investing in cryptocurrency, compared to just 2% of Boomers. Moreover, many prefer to save their money in cash at home, reflecting a cautious approach to traditional banking.
This preference for alternative savings methods underscores the need for credit unions to diversify their offerings. By providing a range of savings products, from high-yield savings accounts to digital investment options, credit unions can attract and retain younger members who might otherwise seek financial solutions elsewhere.
What Credit Unions Can Do to Respond
Given these insights, credit unions have a unique opportunity to differentiate themselves by aligning their services with the savings behaviors of Gen Z and Millennials. Offering products that cater to debt repayment, such as low-interest loans and automated savings tools, can help address the immediate needs of these members. Additionally, embracing technology to offer more innovative savings solutions, like cryptocurrency investments or mobile-first banking experiences, can help credit unions stay relevant in an increasingly digital world.
Furthermore, financial education is critical. Many younger members may not fully understand the long-term benefits of saving in high-yield accounts or the potential pitfalls of relying too heavily on non-traditional methods. By providing educational resources and personalized financial advice, credit unions can empower their members to make informed decisions that will benefit them in the long run.
Conclusion
The financial habits of Gen Z and Millennials are reshaping the savings landscape, and credit unions must take notice. By understanding and responding to the unique challenges and preferences of these younger generations, credit unions can not only attract and retain members but also support their financial well-being in meaningful ways. Now is the time for credit unions to reassess their strategies and ensure they are meeting the evolving needs of their members.
Get the Full Report
To dive deeper into the changing landscape of savings behaviors and what it means for your credit union, be sure to download Plinqit’s “State of Savings 2024” report.
This comprehensive analysis offers detailed insights that can help you stay ahead of the curve and effectively serve your members in today’s evolving financial environment. Don’t miss out on these critical findings—equip your credit union with the knowledge it needs to thrive.
