- 80% of Millennials worry about preparing their taxes. (Compared to 60% of 55+ adults)
- Only 27% of Millennials seek help from tax professionals.
- Only 17% of Millennials actually hire a tax professional. (Compared to the national average of 29%)
So in short, most Millennials know they need help with their taxes, but only a small percentage of them do anything about it. Why do we think that is? Well, it is probably a bunch of things:
1. Millennials don’t trust the government (ie. capitalism).
It’s fairly safe to say that the younger generation has been disillusioned with what the economy has to offer them since they became adults. As an article in The Atlantic puts it:
The House and Senate measures shower enormous benefits on households at the top of the economic ladder, a group that by all indications is older and whiter than the population overall. Then it hands the bill for those benefits largely to younger generations, who will pay through more federal debt; less spending on programs that could benefit them; and, eventually, higher taxes.
Add to this the recent GOP tax cuts that most economists agree is kicking the can down the road so Millennials will have to pick it up later. So for the first time in modern history, the next generation will have a substantially worse economic prospect than the aging adults of today. It’s no wonder why Millennials would rather not think about money and overall distrust money professionals.
2. Younger people have less money to stress about.
This is simple. In general, even if you don’t get the absolute maximum deduction from your taxes, unless you own a business or real estate or have complicated investments, there’s a perception that you don’t leave all that much money on the table. Sure, Millennials want to get every cent back, but if they don’t have much to begin with then they also don’t feel like they have much to lose. Younger earners often feel this way, and that’s fair. Everyone gets more serious about taxes as their wealth grows. This is a classic reason why Millennials (aka, any younger generation) don’t put in the effort of seeking out tax professionals.
3. Millennials are saddled with a bad relationship with fiances from the start.
Lest anyone forgets, Millennials became young adults weighed down by the largest amount of student debt ever. Because of this, many of them have felt shoehorned into a certain financial path. As LendKey put it:
Upon graduation, many had a hard time finding wwell-payingjobs and that has increased their feelings of stress. A large proportion of many millennials’ incomes is now going towards repaying their student loan debt…. Millennials are therefore more likely to make career decisions that are related to their student loan debt. They might look for a high paying job rather than one that provides them with more personal satisfaction or they might take a job where the employer offers student loan repayment benefits. It’s also lead many to focus their financial goals narrowly around student loan repayment and that means that they are likely to be behind on their retirement savings.
If that doesn’t cause a generation to be upset and stressed about dealing with personal finances, we’re not sure what will.
And yet, according to a Boston Research Technologies survey (via USA Today): Millennials spend four hours a week tending to their personal finance! Generation X spends 2 hours. Baby Boomers spend just one. This stat shows that Millennials do care very much about getting their finances in order, despite not wanting to deal with accountants. In essence, Millennials want good accounting but don’t want to deal with accounting.
So how does the accounting industry approach this can of worms?
Accounting for Millennials
It comes down to meeting them where they are. There is a clear shift away from traditional accounting methods:
FIS Global’s US Consumer Banking PACE Index shows that 63% of Millennials use their phone and 33% use their tablets to do their banking. They’re on the move constantly, especially since they are embracing freelancing and the gig economy more than any previous generation. Traditional accounting software wasn’t built with mobile in mind, which is a big part of the reason for the shift in usage.
Next, Millennials are tired of corporate-speak and complicated legalese. A report by Zuula showed that it’s all about plain language and authenticity when communicating effectively with this group. Remember, accounting has to overcome the general distrust that Millennials have as discussed above. A friendlier, more personal approach is key for them to adopt any product, but especially when it comes to their money. Keep the software simple, easy-to-understand, and personable.
Finally, Millennials are for lack of a better word, impatient. (Ok, some better words are “efficiency-oriented,” but that doesn’t roll of the tongue so nice.) They want things to happen instantly, and can’t be bothered with wading through extraneous things to get to their goals. This is why mobile apps have evolved to load instantly and do just one or two things really, really well. Accounting software should keep this KISS principle in mind. An overabundance of features may be a turn-off for Millennials looking to do just a few bookkeeping tasks in a short amount of time.
Young adults want to manage their money better, but the right accounting software has to meet them where they are instead of trying to shoehorn them into a way of bookkeeping that was built for a different generation. Keep it mobile, keep it friendly, keep it focused. Software that can do these things have a much better change of adoption by Millennials than others.
This article was first published on UpWork.
Billy strives to KISS for Millennials and modern freelancers looking for a personal accounting solution. Check out how it works with a free trial today.
This post is written by Robert Woo and first appeared on Upwork.