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According to a new survey, 63% of Millennials own no credit cards. For this poll, the Millennial generation is defined as those in the United States aged 18 to 29.

The survey, put together by BankRate, attempts to get to the root cause for the lack of penetration of credit cards among this younger demographic, despite the attempts to sell the idea of credit cards to this generation. These attempts mostly come from those older than Millennials. BankRate’s survey points out that each successively older age group is more likely to own multiple credit cards.

Instead of credit cards, Millennials prefer to use debit cards. Despite all the information that’s available that shows how debit cards are worse that credit cards for active use, credit cards aren’t gaining traction. Banks have also spent the last few years making debit cards more attractive by adding rewards and new consumer protections that approach the offerings of credit cards, yet they tend to fall a little short. And they still don’t provide the benefit of building a credit history, something older Millennials have already discovered as they’ve attempted to finance a car or house purchase with a loan or mortgage.

Millennials are tied economically to the recession. In the development of an adult, the age range currently associated with the Millennial generation is when world and political awareness sets in. For Millennials, this came at a time where the events of the world were defined by the economy. This period of maturity included the Great Recession, the credit crunch, significant penalties for the banking industry, new regulations, and banks behaving badly. It’s no surprise those who came to understand the world during this time are wary of banks and the products they push.

That doesn’t explain why credit cards are shunned while debit cards are praised. After all, debit cards are bank products, as well. There must be an element of distrust of debt, not just the banking industry. And that might come from the recession, too, as Millennials saw their older relatives and friends struggle with debt.

On top of this, there are quite a few loud voices in the media who prefer debit cards over credit cards, and even though the reasoning they preach is often faulty, the message contains an aspect of contrarianism that Millennials, as a group, seem to like.

The survey is missing something obvious. The use of credit cards among different age groups isn’t a comparison that makes a lot of sense. We shouldn’t be comparing the 18 to 29 year-olds with today’s older generations. These can be interesting data, but it can’t be used to prove any hypothesis that might be suggested by the survey other than “younger people use and own credit cards less than older people.” The better comparison would be between the use of credit cards among Millennials today and the use of credit cards among other generations when they were the age of today’s Millennials.

That would result in some clearer conclusions. We do know that Millennials today are often entering the workforce with higher student debt loads than any other previous generation. That could be a reason Millennials are wary of anything that has the potential to increase debt, as credit cards might. Debit cards are marketed much more heavily today. They didn’t even exist when some older generations were as young as today’s Millennials. Some of these facts should be considered when trying to determine why Millennials don’t carry credit cards.

In general, as one gets older, one progresses in one’s career and builds more wealth. With more wealth, people will grow more comfortable using financial tools like credit cards. I would be surprised if the situation with Millennials today is much different than the situation with Generation X, twenty years ago. In the 1990s, Generation X was coming of the age where awareness of politics and the world kicks in. There was a recession in the late 1980s and early 1990s.

This is from an article from the Los Angeles Times in 1995:

By graduation, [Michael Puccini from Chapman University] had a wallet full of plastic and was $3,000 in the hole. Plus he owed $13,000 in student loans. Overwhelmed, he moved back home after a tearful phone conversation with his father.

“I had a lot of fun with credit,” says Puccini, 30, who has found work in Los Angeles as a public relations agent. “But I’m really paying for it. It’s kept me from doing a lot of things.”

More than any other generation before them, today’s young adults are emerging from school and beginning their careers weighed down by a heavy burden of debt. And fresh data suggest this burden is growing. A Southern Californian’s average credit card balance increased 20% from 1993 to 1995, according to the market research firm Claritas Inc. But for those in their 20s, the balance jumped 70%, to $2,159 as of Sept. 30.

These numbers may look small compared to what surveys throw around today, but debt at this level was a significant burden at the time. Generation X hasn’t truly recovered, and are not poised to be able to live in retirement the way investing firms advertise and the way many among the generation prior to the Baby Boomers, the Silent Generation, often appears to be able to afford. Generation X clearly took advantage of credit cards as they were marketed to them, and it may have been to their detriment.

Yes, the use of credit cards did allow Generation X to spur one of the greatest runs in the real estate industry by buying town houses, condominiums, and single family homes before they were able to afford it, but Millennials may see the struggle of Generation X today and be familiar with stories of the struggles of Generation X in the early 1990s. If they are, it would make sense that Millennials would try to avoid these problems by avoiding credit cards.

Millennials are also the most educated, in terms of college matriculation and advanced degrees, so there might be some truth to the idea that Millennials, as a group, believe they are smarter and more aware of the world than earlier generations — or at least, they might believe they are smarter today than other generations were when they were in the 18 to 29 age group. And thus, Millennials could feel comfortable keeping their approach to finances different than those who have come before.

I never like to generalize attitudes across large swaths of Americans, but there are definitely measurable trends, even if one can always find anecdotes that contradict those trends.

Should Millennials get with the program and start using credit cards instead of debit cards? I want to say yes. Credit cards are simply better products for consumers. But it’s not that simple. The same BankRate survey shows that when Millennials do use credit cards, they don’t pay the bills in full ever month. Only 40% do, compared to a larger percentage of older age groups. Again, this should be obvious; Millennials haven’t yet built the financial independence or stability through their careers that older people have built. So there’s a lot more Millennials need to do to take control of their finances besides just switching from a debit card to a credit card.

On the other hand, Millennials are in a position to change the way other Millennials relate to their finances. This has already started. Millennials — or in some cases Generation X representative who seem to be in tune with the needs and desires of Millennials — are changing the financial industry. Generation X put the banks online, but Millennials are inventing new ways to bank. Crowdfunding, person-to-person lending, mobile payments, financial advisory without human advisors, and other new technologies will shape how Millennials deal with their finances. If Millennials want to stick with debit cards rather than credit cards, in time, debit cards or some other technology will grow to contain all the features necessary to most benefit the consumers.

It might take some time, but I trust the Millennials to figure it out. If something doesn’t work to the changing needs of a generation as it gets older, that generation will change the industry. It has already begun to happen.

Here’s a story about that recent study about Millennials.

By the way, I found Michael Puccini, the Generation X representative featured in that 1995 Los Angeles Times article. He’s now a freelance writer and publicist, after a career in media publicity.

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Any person is a product of his or her environment to a significant extent. And because so much of our personality is formed when we are under the age of ten, there’s something to be said for the benefits of being a child within a family situation that has a positive approach to money management — and life beyond just money, but money is the focus of this article.

I benefited from parents who put a priority on education. As I progressed through high school, I was encouraged to explore my various passions, as well, even though that contributed to less of a focus on the educational system that was providing my grades. Nevertheless, I was lucky. I didn’t choose my parents. I didn’t choose to be born in a first-world country to an educated couple. My family wasn’t rich, but I was privileged by not being within an obvious minority. Religiously, I was and am a part of a minority, but because it wasn’t necessarily visible, I benefited from at least some privilege of the majority.

It’s impossible to know if and how my life would be different today if these variables, all of which are beyond my control, were different. Chances are, some things would be different.

I’ve written on Consumerism Commentary often about taking control of your finances. That is exactly what I needed to do at the turn of the millennium. I was in debt, ignoring things like speeding tickets because I couldn’t afford the fines, spending all of my money on commuting expenses and basic necessities for living. I considered myself a victim of circumstances. Yes, I was a victim, even though I knew I had many advantages in life that would never be afforded to a lot of other people throughout the world and even my country of the United States.

My boss at a non-profit organization tried to impart his wisdom about life, but I wasn’t interested in hearing it. To me, it was empty words from a CEO who refused to offer important benefits to his employees, someone who was able to let the company pay for his expenses without any concern for the struggling financial condition of those who worked for him. Being able to afford a reliable vehicle for transportation was something he didn’t have to worry about, and from that position, it’s easy to say that all aspects of your life are a direct result of your choices.

This is a refrain common among motivational speakers. If there’s something about your life that you want to change, it is within your control to do so. And I eventually learned to accept most of this philosophy when pertaining to money management and financial independence. I still challenge any motivational speaker to go to country run by terrorists and say, “It’s easy. Just leave. Start a business. You’ll become rich.” It’s an extreme example, but there are people out there who really do believe any challenge can be overcome with a little hard work.

For most of us, that’s true. If you’re able to read this article, it’s probably true for you. But there are millions of people in the world who don’t have the luck to be born under your circumstances. Some of those millions of people will eventually escape their oppressive regimes, but the vast majority won’t, and it won’t be due to a lack of effort.

I’ve been very fortunately in my life, particularly these last few years if you look at life from a financial angle. The entrepreneur in me wants credit for that. In fact, the marketer in me finds it very important for me to advertise the fact that I’ve built an unexpected business out of nothing and reached financial independence at the age of 35. For many people, this is a dream come true. Anyone can have an idea, work hard for a decade, more or less, and change his or her life in an amazing way. This is the motivational story that people want to hear. Some who hear it will go on and do great things. Others will not be effected, and even if a motivational story changes one person’s life, doesn’t that make it worthwhile?

The human in me takes a different approach. The success story is such a powerful motivator that sometimes it drowns out the reality. The marketer doesn’t want to admit that factors other than perseverance played a role in success. The entrepreneur doesn’t want to believe that other people were involved in making the impossible possible. If you start to accept that there is more to your success than you, it makes it more difficult to sell books and products or to book yourself on national television.

We want life’s stories to be perfect and simple. We want them to be understood, from start to finish, within a 42-minute hour. A success story isn’t simple, though. Had I faced social obstacles like racism, I may have had a different outlook on life that led me in a different direction. If I had been born in 1776 instead of 1976, I might have died from bronchitis as a child. Had I been born in the Middle East instead of Brooklyn, I might have died in war. It would have been very unlikely for me to come out of a family without an education with a love for learning, a desire to live up to high expectations, and the tools necessary to succeed.

An entrepreneur will never credit “luck” when asked for the reason for one’s success (though many certainly will blame “bad luck” when they fail). To admit that circumstances, or anything beyond personal choices and effort, played a major role in success makes all the hard work seem less valuable. I know that I wouldn’t be where I am today without the advantages I was born with and the smart people I’ve surrounded myself with. Yes, I worked at my passion of building online communities since I was a teenager. That helped me prepare myself for the perfect storm that arrived with my business, where my passions coincided with a huge public interest and a large marketable field.

If I hadn’t done the work, I would have been behind, trying to catch up, if I had tried at all. But if the circumstances of my life that led to that instance were different, if I had been discouraged from using the internet, from spending my time learning programming languages, or from rewriting and writing code that allowed people to communicate online, I might not have followed my passions. If my parents encouraged me to worry more about my future earning potential than my hobbies, my life would have been much more boring and probably much less successful.

I can’t forget about all of these aspects of life just to sell a story about hard work and success. I can’t ignore my human side and neglect gratitude for others around me.

If you find yourself blaming your financial problems on aspects of your life that you can’t control while attributing your success to hard work, you might be able to motivate people to succeed. But you’d be missing, or perhaps willfully ignoring, the full picture. Your choices and your circumstances both help to form who you are today. The more you ask yourself, “Why?” the more you’ll be able to truly understand your circumstances today and a possible path for improvement.

No one sees success in the world without external influence. At the same time, all the hard work in the world can’t save everybody from the bad circumstances into which they were born. There are exceptions to every rule, but they are few and far between, and despite the use of exceptions as motivational tools, they’re not likely to help the majority of people.

Take a moment and thing about your failures and your successes. Who do you blame for your failures? Is it always someone other than yourself? If so, take some time and think about the choices you’ve made that may have led you to that result.

Who do you credit for your successes? If you only see the hard work you’ve done, take some time to think about whether your situation would have been possible had you lived in another time or another part of the world. Think about the obstacles you’d need to overcome.

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Naked With Cash is an ongoing series at Consumerism Commentary in which readers share their households’ finances with other readers. These participants benefit from the accountability that comes from tracking their finances publicly and the feedback of the four expert Certified Financial Planners (CFPs).

For more information, read this introduction.

This year, we have four participants who will share their financial reports, exposing the results of their financial choices. Each participant is paired with one of our Certified Financial Planners. The experts will provide insight and guidance that will help our participants take their finances to the next level by the end of 2014. Learn about this year’s participants and experts.

Laura and Leon, together, earn more than $125,000 a year. Their main focus right now is paying off student loans, and they want to have that done in order to be better ready to start a family. Laura and Leon hope that they can focus better on their finances, and learn to manage their money more effectively. (Read last month’s update.)

After reading Laura and Leon’s comments, you can read commentary from Roger Wohlner, CFP. Roger Wohlner appears courtesy of The Chicago Financial Planner. This month, there is a focus on emergency preparedness.

Read the full article →

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Naked With Cash is an ongoing series at Consumerism Commentary in which readers share their households’ finances with other readers. These participants benefit from the accountability that comes from tracking their finances publicly and the feedback of the four expert Certified Financial Planners (CFPs).

For more information, read this introduction.

This year, we have four participants who will share their financial reports, exposing the results of their financial choices. Each participant is paired with one of our Certified Financial Planners. The experts will provide insight and guidance that will help our participants take their finances to the next level by the end of 2014. Learn about this year’s participants and experts.

Jake and Allie are animal lovers who enjoy their pets and have no plans for children. Both are committed to early retirement. Jake and Allie are both interested in owning side businesses, even though they plan to use their nest egg for living expenses. The couple enjoys travel and make it a priority to take trips throughout the year. They believe that it makes sense to use part of their combined $140,000 income to enjoy life now. (Read their update from last month.)

After reading Jake and Allie’s comments, you can watch a Google Hangout they participated in with Financial Planner Neal Frankle. Neal Frankle appears courtesy of Wealth Pilgrim and MCMHA.org. This month’s Naked With Cash focus is on emergency preparedness.

Read the full article →

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Naked With Cash: Brian, July 2014

by Luke Landes
Brian - Naked With Cash 2014 Net Worth

Naked With Cash is an ongoing series at Consumerism Commentary in which readers share their households’ finances with other readers. These participants benefit from the accountability that comes from tracking their finances publicly and the feedback of the four expert Certified Financial Planners (CFPs). For more information, read this introduction. This year, we have four ... Continue reading this article…

2 comments Read the full article →

Beware the Inspirational Story or Your Wallet Will Suffer

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Storytelling is powerful, and is the smart marketer’s tool for separating consumers with their money. Watch out for inspirational stories.

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Depression prevents people from making what other would consider “logical” financial decisions.

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Sallie Mae’s recent report explains the results of the latest survey on how American families pay for college.

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