What it means
Generational labels are shortcuts that researchers use to study people who grew up in similar times. Millennials came of age around the turn of the century, many entering the workforce during or soon after the 2008 financial crisis.
That timing shaped their early careers, savings and attitudes to risk. In economic terms, the generation is notable for its size and its position in the life cycle.
Many are now in their prime earning years, starting families and buying homes, so they drive demand for housing, insurance, education and investment products. They also form a large part of the workforce and are moving into management roles.
Financial experiences have often included student debt, rising housing costs, and an economy where careers are less linear than in the past. Many have been comfortable with digital banking, online shopping and subscription services from an early age.
Businesses that make financial products easy to use on a phone tend to appeal to them. For employers, this generation values flexibility, development and purpose alongside pay.
For marketers, it is a segment that researches online and trusts reviews and peers. For financial planners, it is a group that needs help balancing retirement saving, home purchases and caring for both children and parents.
Care is needed when using generational labels. People within any group differ widely in income, wealth, location and values, and the label can hide those differences.
It is best treated as a rough guide to shared context rather than a description of every individual. Timing is also important.
The oldest members of this generation are approaching mid-life and thinking about retirement saving, while the youngest are still early in their careers. Planning that lumps them together can miss that the needs at each end are quite different.
In practice
Real-world examples.
Example
A mortgage lender notices that the average age of its first-time buyers is rising and that many are Millennials with student loans. It designs a mortgage that treats student loan payments fairly in affordability checks and offers a digital application. Approvals rise by 12%, and the lender notices that applicants spend less time chasing paperwork.
Example
A software company building a budgeting app researches how its target customers manage money. Interviews with Millennial users reveal a preference for automatic saving and clear spending summaries. The company adds those features and sees stronger engagement. Within a year, the share of users who set up a savings goal rises from 20% to 35%.
Example
A human resources director at a consulting firm reviews why junior managers leave. Exit interviews show that development opportunities and flexible working matter as much as pay. She introduces mentoring and hybrid schedules, and retention improves. She estimates that each avoided departure saves roughly half a year's salary in recruitment and training.
Case study
Seen in the real world.
Brightpath Insurance is an illustrative, fictional insurer whose customer base is ageing. Its average customer is 58, and the board worries that younger households are not buying its life and home policies. A survey shows that most Millennials in its region have never spoken to an insurance agent.
The strategy team designs a service where customers can get quotes in five minutes on a phone, view their cover in an app and talk to an adviser by video if they wish. The development cost is $2,500,000, and the team sets a target of 10,000 customers paying an average premium of $400 a year.
In this illustrative case, the channel reaches 12,000 customers in two years, with annual premiums of $4,800,000. The board concludes that the generation is not uninterested in insurance, only in the way it had been sold. The new channel also lowers the average age of the customer base, which improves the long-term outlook for premium income.
Watch out
Common mistakes.
- Treating all Millennials as a single group with the same finances, when incomes, wealth and circumstances vary widely.
- Using the label as an age in years, when the birth-year range is fixed and the age of the group increases over time.
- Assuming that older and younger groups never share the same habits, when many behaviours, such as using mobile banking or comparing prices online, cut across generations and depend more on life stage than on birth year.
Questions
People also ask.
Which birth years define Millennials?
A commonly used range is about 1981 to 1996, though some sources use slightly different dates, so it is wise to state which range you are using in any report.
Why do businesses care about generations?
Generations help companies plan products, marketing and workforce policies for groups with a shared economic background.
Are generational labels reliable?
They are useful for broad patterns but unreliable for individuals, so they should be combined with real customer data such as purchase history, income and survey responses before any major decision is made.
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