When it comes to debt and debt collection, having an awareness of popular trends and practices in society can go a long way towards making sure that debt collection efforts are successful, and that the methods are being used to not only return lost revenue, but secure potential future revenue cycles going forward. At Southwest Recovery Services in Dallas, Texas our team of skilled professionals has been helping small businesses recover lost revenue and settle the debt on delinquent accounts for years. As the times change and generational values shift, it’s important to have a clear understanding of how emerging social values have changed the landscape when it comes to debt and debt collection.
Creditors and businesses that are looking to market products and services to millennials need to develop a clear understanding of how younger generations approach the idea of money, credit, and debt. As the millennials become a larger and larger market for a variety of industries, some businesses are facing troubles when attempting to collect on amounts owed due to the large disparities between how this generation and earlier generations such as the boomers approach the concept of debt.
Lenders and other businesses need to understand that the millennial generation’s relationship with money, credit, and debt is drastically different from the Boomers or Generation X. As a generation, these individuals have been told that they need higher education to be successful in life, just like the two generations before them. Students then put themselves into a difficult debt situation money by promising themselves great careers and great lives. Then, there was a recession that shook many major markets and upset the plans of an entire generation.
University and Workforce
Many millennials have been indebted since their time as young adults because the focus is on high salary levels after finishing their degrees. Student loans are consistently high, and a bachelor’s degree is the minimum needed to lead to a career with a healthy promise for a comfortable retirement. Meanwhile, the US economy was hit by a housing crisis and many traditional entrepreneurs since filed for bankruptcy, dismissal or other forms of contracts.
These millennials have since moved into the workforce, but many of those who graduated have yet to earn what they expected to cover student debt and other financial concerns. The Pew Research Center estimates in 2016 that 15% or more of the young adult population lives at home with their families. They may have moved at first, but “returned home” because wages, debts, and other financial problems were below expectations.
How Millennials Perceive Credit and Debt
Business Insider recently reported that the millennial generation was responsible for $1.1 trillion of the $3.6 trillion in consumer debt currently circulating in markets today. While part of the debt comes from student loans, young adults also owe car loans (including leasing), healthcare debts, and various credit accounts. Financial responsibility has not been a focus of education or concern for most millennials, which is why they don’t act as quickly on things like credit card offers or rental agreements for an apartment.
A recent study revealed some interesting information about millennials:
- 39% feel stressed about debt
- Less than 20% believe they understand their financial options, including repayment of student loans
- Nearly 30% feel unready or lack information about budget or loan processing options
- Student credit cards and debts keep them from making large purchases (like a home) and making decisions (like starting a family).
Millennials focus more on experience than on expensive things like new homes or cars. In short, for millennials, the value of spending money is more important than owning goods.
How to Approach Collection in a Millennial Driven Market
Creditors and collection agencies can achieve increased success when dealing with millennials if they are considerate and understanding of the challenges this generation is facing. By working with these consumers and helping them to better understand their options and responsibilities, these young adults are more likely to engage with the debts they owe and settle them promptly. By raising awareness of financial concerns, businesses and collectors can make surprising progress towards settling past due amounts by encouraging millennials to plan for their future.
Use Southwest Recovery Services in Dallas, Texas
If you’re dealing with millennial customers who are struggling to pay off their debts to your business, then working with a team of professionals who understands this generation and the best way to encourage effective revenue recovery. To learn more about our collection services, or to speak with us about starting a collection inquiry on your behalf, don’t hesitate to reach out today.