Hands-off, creditworthy millennials manage their finances without making detailed budgets or categorizing expenses. As a result, more than half of millennials have experienced a “cash trap” in the last three months, meaning that they’ve had to borrow money or dip into savings to make it to the next paycheck
A new survey from Varo Money found spreadsheets and budgeting apps are too detailed for millennials, and while most hands-off millennials manage by bank balance because it’s simpler, the method fails when their spending spikes or unexpected events pop up in their lives.
Millennials have the same hopes as previous generations but are terrified they can’t get there.
• Respondents’ top three hopes were following their passions (66%), traveling the world (42%), and getting married (40%)
• 80% of respondents actively worry about the state of their finances
Hands-off millennials manage by bank balance rather than a detailed budget.
• 78% rarely or never make spreadsheets for their finances, and 35% say they’d rather vomit than do so
• 58% rarely or never plan out next month’s spending in advance, and 36% rarely or never review last month’s spending
• However, 80% check their bank balance at least once per week, and 69% spend mostly or always on their debit card
Surprisingly, most hands-off millennials are active savers.
• The vast majority of survey respondents (80%) try to save money by reducing spending on daily purchases, like restaurants, coffee and ridesharing
• Nearly half (50%) of respondents move their extra checking balance into savings
• However, only 24% of respondents have a percentage of their paycheck automatically deposited into savings
90% of millennial respondents actively and responsibly use some form of credit.
• Millennial respondents leverage many forms of credit to achieve their life goals, including mortgages, auto loans, student loans, personal loans, and credit cards
• 92% of respondents have at least one credit card
• Of those with a credit card, 72% carry a balance from month to month
Through providing a full financial picture, proactively notifying customers of their spending patterns, and helping them bridge cash traps when they do happen, Varo is building a leading set of tools uniquely designed for hands-off, creditworthy millennials.
Varo is building a banking app that helps customers cover their expenses, pay their bills, and build their wealth over time—so they can stop worrying about their money and get on with living their lives. Unlike traditional banks or other fintech apps, Varo is building an all-in-one solution with frictionless, integrated, and automated deposit, budgeting, savings, and lending products that help our customers solve everyday money problems and achieve better financial outcomes.