Introduction
What makes Generation Y different from Generation X? Welcome to the celebration, Gen Z & Gen A! What are the points of cutoff? For each generation, what is the age? Are they that dissimilar?
It is understandable why there’s a great deal of misunderstanding regarding generational cohorts.
You are not alone if you have ever felt confused by such “alphabet soup” containing names. When you consider that millennial customers will be the highest-spending group in 2020 with a predicted $1.4 trillion in purchases, you can see where the true discontent lies.
Even though a couple of “once-in-a-lifetime” recessions during the most influential career years have sapped their present wealth, Millennials could become the wealthiest generation in the history of America by 2030 as they acquire over $68 trillion coming from the Baby Boomers and their early Generation X parents. This wealth transfer positions Millennials to potentially surpass previous generations in economic power.
Millennials will lose ground to Gen Z in terms of purchasing power the following year, with projections showing that they will earn $33 trillion by 2030, or over a quarter of the world’s total GDP. How old are Millennials compared to Gen Z?
Finally, but just as importantly, there is Generation Alpha, which Mark McCrindle (social analyst) named the youngest kids on the earth. There will be around 2 billion Gen Alpha people on the planet by 2025.
The future of your financial organization depends more than ever on younger people, regardless of how you dissect the facts.
You are not going to get a dime out of them unless you know who they are and exactly what they desire.
Individual’s age. Birthdays never change.
When classifying generations, their ages are frequently a source of difficulty. Rather than current age, birth year is used to establish generational cohorts (loosely). It’s easy to understand why: generations age in cohorts. Consider Millennials as students in college (18–22 years old), and you’re not just out of touch; you’re thinking about a phase of living, rather than a generation. Since millennials have long since graduated from college, Gen Z currently predominates at that period of life.
For instance, a Generation X person who reached eighteen in 1998 would be older than 40 now. He or she becomes open to fresh marketing messages and becomes concerned with very different topics at that time. Your generation is the one into which you were born, irrespective of how old you are.
So, how old are Millennials now? Following is a breakdown of the age range:
- Baby Boomers: People born between the years 1946 & 1964 are known as baby boomers. Currently, 71.6 million Americans are between the ages of 57 and 75.
- Gen X: Currently, 65.2 million individuals in the United States belong to the Gen X demographic, which was born between 1965 & 1979/80 and ranges in age from 41 to 56.
- Millennials: Also known as Generation Y, they were born in the years 1981–1994/6. At present, 72.1 million Americans fall into this age range, which is 25 to 40.
- a) Gen Y.1: Ages 25 to 29 make up Gen Y.1 (approximately 31 million Americans).
- b) Gen Y.2: 42 million Americans make up Gen Y.2 (ages 29 to 39).
- Gen Z: The latest generation, known as Gen Z, was born between the years 1997 & 2012. Approximately 68 million of them are in the United States and range in age from 9 to 24.
- Gen A: Gen Alpha, which comprises roughly 48 million individuals in the United States, began with kids born in 2012 & will likely continue until 2025, if not beyond.
Both Gen Y groups are now commonly referred to as “Millennials” (see below for additional information on Y.1 & Y.2).
Individuals born between 1994 & 2000 are frequently referred to as “Zillennials,” a term used to describe a category of people who fall between the final phase of the Millennial generation and the beginning of Gen Z.
The youngest individuals on the globe were originally referred to as Generation Z, while Generation A currently holds that title. Though it’s possible that Gen Z & Gen A will take on new labels when they transition out of youth and into adulthood, just like Gen Y did when they became Millennials. Although categorizing this group of people as Gen A facilitates discourse, it might not be the final word for them.
Why do generations get their names from letters?
Those born between 1965 & 1980 comprised Generation X. The Baby Boomers, born between 1946 & 1964, were the generation that came before them. Americans experienced a “baby boom” as a result of their increased prosperity following World War II. Consequently, the offspring were known as Baby Boomers.
However, the Boomer generation’s obvious cultural identity was lacking in the subsequent generation. That’s actually the anecdotal source of the expression “Generation X,” which refers to the undefined traits that they would eventually become recognized for. This phrase became ingrained in our lexicon, according to Billy Idol, novelists, and sociologists, depending on who you ask.
Everything became down-alphabet from that point on. Those born between 1981 and 1996 (take and give some years on each end) comprised the generation that naturally followed Generation X, or Generation Y. William Strauss and Neil Howe are commonly credited with coining the term “Millennial.” When the approaching year 2000 started to play a significant role in popular culture, the two came up with the word in 1989.
Babies born between the late 1990s and the present are referred to as Generation Z. There has also been a sudden surge in possible labels, such as Zoomers, iGeneration, post-Millennials, Gen Tech, and Gen Y-Fi.
Some claim that the term Generation Alpha is derived from the Greek alphabet which signifies the beginning of a new category or set of products, but it could also just be a convenient way to transition to a fresh alphabet.
Dividing Generation Y
Not every Millennial is at a comparable phase of life right now, according to Javelin Research. Although the majority of Millennials originate around the year 2000, some are nevertheless in the early stages of adulthood & are adjusting to new jobs and setting down, whereas the more mature Millennial generation has a home and is starting a family. For marketing reasons, it’s helpful to divide this group into Gen Y.1 & Gen Y.2, because you can envision how bearing a child may alter your goals and interests.
Both of these groups differ greatly in terms of their financial stages in addition to their backgrounds in culture. It’s the younger generation that’s starting to show off their cash. The latter may be renewing their home loan and parenting children, and they have a longer history. The disparity between needs and priorities is considerable.
Any younger individuals or those in this phase of life can use the same reasoning. We have a tendency to become more alike as we age and deal with comparable problems. Every phase of life is more dramatic depending on how young you are. Think about how someone in primary school and somebody in high school are different. Even while their generations may be similar, their needs and perspectives are completely different. How old are Millennials and what stages of life are they currently experiencing? This understanding is crucial for effective marketing and engagement strategies.
You will be far more successful marketing to younger generations by segmenting your approach and messaging than by targeting them as one cohort.
Why does the name of the generation cohort matter?
Each generation tag provides a convenient way to quickly relate to motivations, attitudes, and events in history spanning almost 20 years. Very few people identify as Millennials, Gen Xers, or any other label. How old are Millennials? These generational tags help businesses and researchers understand and communicate effectively with different age groups.
These are helpful keywords for businesses, and they often find their way into everyday speech. It’s crucial to stress once more that characterizing a cohort only based on age range leads to confusion very fast. In a decade, Millennials will have different priorities, thus marketing strategies will need to alter accordingly. In addition to age and generation, you may also employ other cohort groups to gain deeper insights into your customer base.
Recall that these artificial boundaries between generations are exactly that—arbitrary. They are always changing and are not a precise science. How old are Millennials today might differ significantly in a few years as they progress through different life stages.
Reaching individuals through marketing messages appropriate for their stage of life is the aim, regardless of the language or classification you employ. In summary, understanding the soup du jour for the kind of customer you are seeking is the most crucial thing one can do, regardless of the number of characters that you add to the alphabet soup.
Why are the generations different from one another?
Prior to delving into any generation, bear in mind that the precise birth years are disputed due to the lack of similarly conclusive benchmarks used to categorize subsequent generations (following the Baby Boomers). However, you should be able to determine what generation you correspond to based on this broad range.
Another thing to keep in mind is that younger generations usually adopt modern technology first, with older generations adopting it more slowly after that. 96 percent of Americans, for instance, own a smartphone, yet Generation Z—the newest generation—uses them the most. How old are Millennials in terms of technological adaptation and lifestyle preferences? This information helps in crafting targeted marketing and communication strategies.
The Baby Boomers
- Years of Birth for Boomers: 1946 to 1964
- Present Age: 57-75 years
- Size of the Generation: 71.6 million
- Consumption of Media: The largest audience for traditional media, such as radio, television, newspapers, and magazines, is the baby boomer generation. Ninety percent of baby boomers use Facebook, even though they are such conventional people. In an effort to maintain relationships with loved ones and make new acquaintances, this generation has started utilizing technology more frequently.
- Banking Customs: When making transactions, boomers would rather visit a branch. In particular, for transactions under $5, this older generation still favors using cash.
- Influential Occurrences: Cold War tensions, the movement of hippies, and postwar optimism.
- Their financial future: The amount of loans for education owed by this generation is increasing at the fastest rate. This may seem contradictory, but it makes sense because the wealthiest generation is the one who wants to assist their kids with their college debt. Their attitude is that you should not aim to leave a fortune to your children, but rather that you should provide them with enough care to get them started on the correct path. For Boomers, making sure they can afford retirement is a top priority because more and more people are surpassing their retirement savings, pensions are disappearing, and their social security is in danger.
Gen X
- Years of Birth for Gen X: 1965–1980
- Existing Age: 41-56 years
- Additional Nicknames: MTV Generation, “Latchkey” Generation
- Size of the Generation: 65.2 million
- Consumption of Media: In addition to watching TV (approximately 165 hours a month), Generation X still checks newspapers and periodicals and tunes in to the radio. Nonetheless, they possess a strong digital literacy and devote almost 7 hours per week to Facebook, which is the greatest of any generational group.
- Banking Practices: Despite their preference for in-person transactions, Gen Xers are technologically adept enough to conduct some research and handle their finances online. They exhibit brand loyalty and think that banking is a personal affair.
- Calibration Events: the conclusion of the Cold War, the emergence of personal computers, and the sense of disconnection between both enormous generations.
- Regarding finances, Gen X is attempting to support their growing family, settle their school loans, as well as take care of their elderly parents. They are highly strained by the demands on their finances. With their mortgage making up the majority of their debt, Gen Xers on average had $142,000 in loans. In addition to paying off debt, they want to establish a reliable future savings strategy.
Gen Y (Millennials)
- Years of the Millennial Generation: 1981–1994
- Age Range Right Now: 25–40
- Additional Nicknames: Echo Boomers, Gen Me, Gen Y, and Gen We
- Size of the Generation: 72.1 million
- Consumption of Media: Although traditional cable is still the favored supplier, Netflix surpasses it with 95% of viewers. The popular decision is to cut the cord and switch to streaming services. Although 32% of this group will still make purchases on a PC, they are very comfortable using mobile devices. Most of the time, they have several social media profiles.
- Banking Practices: Compared to earlier generations, millennials are less brand loyal. Customers are impatient with ineffective or subpar service and would rather shop for features and items first. Millennials, then, put their faith in companies like Google and Apple which have a strong track record of producing high-quality products. In order to better handle their debt, they look for digital solutions, and they regard their financial institutions as transactional rather than relational.
- Events that Shaped History: The Great Depression, the Internet & Social Media’s Technological Explosion, and 9/11
- With massive student loan debt, millennials are driving the workforce and will likely face significant financial challenges in the future. Large purchases like houses and marriages are being postponed because of this. The choice of on-demand services by Millennials indicates that they value access over possession as a result of this unstable financial situation. They are looking for partners who can help them make important decisions.
Generation Z
- Birth Years of Generation Z: 1997–2012
- Ages at Present: 9 to 24
- Other names are Homeland Generation, Post-Millennials, and iGeneration.
- Size of Generation: 68 million
- Consumption of Media: Around 10.3 years old, the typical Gen Zer got their first cell phone. Many of them spent their childhoods using the smartphones or tablets of their parents for playtime. The smartphone has become their go-to means of communication since they grew up in a world where everything is connected. A typical person uses their cell phone for three hours per day.
- Banking Practices: This generation has taken a more cautious approach to money after witnessing the struggles faced by Millennials. Their goal is to stay out of debt, thus they value products or services that help them achieve that. Their primary focus is debit cards, which are then followed by banking via mobile devices.
- Tailoring Events: mobile phones, online communities, never having lived in a nation free from conflict, and witnessing their parents’ financial hardships (Gen X).
- Next financial developments for Generation Z: Studying personal finances. They are starting savings accounts at earlier ages than previous generations, and they also have a high demand for financial knowledge.
Gen Alpha
- Birth Years of Generation Alpha: 2012–2025
- Age Range Right Now: 0 to 9
- None of the other nicknames have stayed. The nickname frequently refers to a pivotal moment or quality.
- Size of the Generation: 48 million and Increasing
- Consumption of Media: Alphas are growing up in houses that are filled with intelligent speakers and gadgets; daily objects are integrated with technology. Because of the global epidemic, a large number of kids attend school electronically, and they are increasingly choosing to learn online using resources like Prodigy, Khan Academy, and IXL. Due to their Millennial parents setting up social media profiles for their young children, many of them have already been online prior to they were even born.
- Banking Routines: While some of the more established Alphas might have Greenlight accounts, they lack clear-cut routines for their banking. Since they were raised in the digital age, they will seek individualized, fully integrated customer experiences. Current research suggests that the Alpha generation will be among the wealthiest and highest educated. It’s unclear if other factors, such as “my parents bank there, as do I,” or their parents’ financial practices will have an impact on their banking behaviors.
- Events that shaped history include the global pandemic, the social justice movement, politics under Trump, and Brexit.
How do various generations use technology?
This still mostly holds true right now: younger Americans have always embraced and used technology before older Americans have.
Despite the fact that Baby Boomers may not utilize technology as much as Generation X & Millennials do, they are nevertheless using it at a faster rate overall.
The probability of smartphone ownership among Boomers has increased significantly from twenty-five percent in 2011 to 68 percent in 2019.
Is it best to classify customer behavior by generation?
Comprehending generational trends is crucial since they reveal comparable perspectives and actions among consumers who share similar life experiences with their peers. Understanding these age groupings is also beneficial because age is a common feature in audience segmentation and marketing techniques.
However, different generations tell different stories, and it might be challenging to control their activities. All generations eventually grow up, after all. Can you, then, rely just on age ranges?
Do generations have distinct banking habits?
Indeed, and for many reasons.
- Every generation has had varied periods of time in the labor force and has amassed differing amounts of wealth.
- The average and median wealth of Baby Boomers are $1,066,000 and $224,000, respectively.
- The mean net worth of Generation X is approximately $288,700, with a median of $59,800.
- The average net worth of millennials is approximately $76,200, but only $11,100 is their median net worth.
- Since so many members of Generation Z do not yet have a career or net worth, it is challenging to report on their average net worth.
- Whether it’s retirement, the cost of their children’s college education, or purchasing their first car, every generation is saving and getting ready for different life phases.
- With regards to handling financial connections, every age has its own preferences because they grew up in rapidly changing technology environments.
- Every generation has its own financial attitudes and perceptions of institutions shaped by the financial environments within which it was up. Every generation has had to adjust to novel methods of banking and living, nevertheless, COVID-19 has turned into a great equalizer in the last year.
What effects are these disparities in banking having on the market?
1. Comfort versus individual attention
Maybe you’re right if you believe that robots have begun to take over the world. On the other hand, this might not be an adverse outcome for Generation Z and Millennial shoppers. Indeed, a recent research by Adobe Analytics found that 31 percent of Millennials and forty-four percent of Gen Z have utilized banking chatbots to get answers to their queries. But before you conclude that using a chatbot is surely a horrible experience, more than half of the users in both groups claimed that using one was preferable to speaking with a live person.
Even young people, though, appreciate the extra help of an actual human agent for more complex financial operations.
2. Security remains paramount at all times. However, priorities differ among generations
“Security” ranked highest among Generation Z, Generation Y, Generation X, and Boomers when selecting their first bank. For Generation Z and Millennial customers, “reputation,” usually referred to as your brand came in second.
Branch locations, however, came in second place among Generation Z and Boomer customers, with “reputation” trailing closely behind. Although branch sites are still important to younger clients, they are not as important as an institution’s online and application services.
For Generation X, personal assistance was more important than online and application services. Regional banking was increasingly significant to Baby Boomers.
3. These days, not just the younger generation uses technology
Digital & mobile banking offerings are increasingly being adopted by younger generations, as has been the case for some time. A new influx of late adopters, however, who now bank online as well, has been sparked by COVID-19.
An online poll conducted by Zelle recently revealed that 82% of elders (those over 55) now bank on the internet more often, with 61% & 55% also using social networking sites and smartphone banking with greater frequency.
That roughly corresponds to the beginning of the Baby Boomer generation, which is today comprised of people aged 57 – 75. Although the duration of this transition to online resources and applications is yet unknown, your chances of expanding your digital presence with this generation increase with the quality of your online experience.
Elderly people are acting more like younger people these days. Furthermore, you must already engage with the younger people where they’re at if you hope to prosper in the market of the future. This is your chance to go beyond the physical location with your excellent service brand.
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