While both Millennials and Gen Zers may look young, they are very different in how they save, shop, interact with brands and view money.
The COVID-19 pandemic and the ensuing lockdowns have changed the finance and spending decisions of India’s young. Born as successive generations—Millennials between the years 1982 and 1996 and Gen Zers between 1997 and 2012—have several similarities. Both generations are collectively described as ‘India’s young’ and both are highly connected to technology and the internet.
However, two-generational cohorts differ vastly. A recent study by Tata Capital found the two generations to have several differences when it comes to financial, social and technological behaviour. And this defining shift—the Millennial Pivot—which best can be described as a tipping point that defines how young people’s behaviour and attitudes begin to change around the age of 25 has further been highlighted in the months since the start of the pandemic.
The COVID-19 Crisis has impacted each Generation’s Behaviour Differently
The Tata Capital study has pointed out that while both generations have markedly different financial habits compared to past generations, they still differed on several counts. With the onset of COVID-19 the life of millennials—a generation associated with spending more and saving less—has turned topsy-turvy. The lockdown and ambiguity have forced them to pause and evaluate their lifestyle and spending habits. A generation that believed in buy-now-pay-later policy is suddenly thinking about saving for a rainy day. Professionals who face the risks of salary cuts and layoffs are learning to adjust with less money. The study has pointed to 34% of the Gen Zers claiming to spend up to 15% on non-essentials while 31% of the millennials did the same. However, such patterns may see a shift, with over half of Millennials (52%) and 49% of Gen Zers have already experienced an impact on their household income—more than any other generation.
Gen Zers expect to get more for their money when it comes to spending. They are not brand-crazy, would rather own something without the logo and spend less than pay more for a branded product. In comparison, Millennials are brand loyal and will give a retailer a second chance if they like the brand. This too could possibly see a change. Over half (54%) of Millennials, according to the First Insight survey, surveyed indicated that coronavirus affected their purchase decisions—more than any other generation. This has prompted 40% of Millennials to state that they were cutting back on spending in preparation for the financial uncertainties that may result due to the coronavirus pandemic.
In a sense, the present pandemic environment is a generation-defining moment for banks and credit unions as well. The study has brought to light the fact that banks are the first preference for borrowing money for 46% of Millennials as compared to 30% Gen Zers who consider family as their first choice. However, since the pandemic was confirmed in February, Google searches for “how to invest” have shot up. This presents banks and credit unions with a unique opportunity to reach out to these generational demographics who now want to invest more.
The Global Crisis Has Changed the Way the Two Generations Think about Money
While both Millennials and Gen Zers may look young, they are very different in how they save, shop, interact with brands and view money. It is evident that there is a tipping point—a Millennial Pivot—that clearly marks the difference between the two cohorts. And the financial decisions taken by the two-generational cohorts during the present Coronavirus pandemic has only reinforced the existence of such a tipping point.
(By Saurav Basu, Head-Wealth Management, Tata Capital)