Varo Money, Inc., a digital banking app for ambitious, responsible millennials who are hands-off with their money, today announced the release of its deep dive survey on how “hands-off millennials” manage their finances without making detailed budgets or categorizing expenses. Varo surveyed 287 hands-off, creditworthy millennials about their financial hopes and fears, their day-to-day financial routines, and their use of credit.
Typical hands-off respondents in Varo’s most recent survey are working full-time, well-paying jobs in cities across America. The survey revealed that hands-off, creditworthy millennials need better systems for managing their financial lives. Spreadsheets and budgeting apps are too detailed for most respondents, 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 percent), traveling the world (42 percent), and getting married (40 percent)
- 52 percent of respondents 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
- 80 percent of respondents actively worry about the state of their finances
Hands-off millennials manage by bank balance rather than a detailed budget.
- 78 percent rarely or never make spreadsheets for their finances, and 35 percent say they’d rather vomit than do so
- 58 percent rarely or never plan out next month’s spending in advance, and 36 percent rarely or never review last month’s spending
- However, 80 percent check their bank balance at least once per week, and 69 percent spend mostly or always on their debit card
Surprisingly, most hands-off millennials are active savers.
- The vast majority of survey respondents (80 percent) try to save money by reducing spending on daily purchases, like restaurants, coffee and ridesharing
- Nearly half (50 percent) of respondents move their extra checking balance into savings
- However, only 24 percent of respondents have a percentage of their paycheck automatically deposited into savings
90 percent 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 percent of respondents have at least one credit card
- Of those with a credit card, 72 percent carry a balance from month to month
“There’s a stereotype that hands-off customers—people who aren’t super involved in the details of their spending—don’t care about money and don’t think about the future, but it’s simply not true. The survey reveals they do plan for the future and see money as a tool to live the lives they want,” said Colin Walsh, co-founder and CEO of Varo Money. “They’re focused on a future that’s often one year out—and are looking for ways to pay down debt faster and save more automatically without having to track every penny in a spreadsheet,” he said.
“We hear from our customers that the once-in-a-lifetime trip, the random car accident, or simply forgetting about bills they scheduled can wreak havoc on their finances for months,” says Walsh. “We call it the ‘cash trap’ because these situations build on each other and prevent the accumulation of substantial savings when customers are constantly depleting them to cover their bills and expenses.”
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. “It’s totally possible to get ahead financially as a hands-off person—and that’s why we founded Varo,” said Walsh.
About Varo Money
Varo Money, Inc. (“Varo”), is a digital banking app for the millions of ambitious, responsible millennials who are hands-off with their money and want a bank that’s going to work for them. 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. Based in San Francisco and privately held, Varo has raised $34M with an early funding round led by Warburg Pincus in May of 2016, one of the largest-ever for an early-stage financial technology company. Bank accounts for Varo Money are provided by The Bancorp Bank, Member FDIC. For more information, please visit varomoney.com and follow us on Twitter @varomoney.