By Jay Acharya, Capital One Canada
Special to the Financial Independence Hub
When my wife and I bought our house, it felt like a massive achievement for us as we had diligently saved our money for the down payment. When we told people about it, they were full of questions about the neighbourhood, the kitchen and how many bedrooms there were.
We were so proud of ourselves for accomplishing this milestone that we eagerly shared pictures and every detail about our new home. The funny thing is, no one asks you to tell them the story about how you saved up to buy the house in the first place. That is where the real drama and the value of the conversation is – then again, you can’t take pictures of the restaurant meal you skipped or the stay-at-home vacation you took and post them on social media.
New car, new house, new clothes – the idea that owning bigger, more expensive things has traditionally been valued by our society as a symbol of status and accomplishment. Now enter the millennials: the demographic that is challenging the status quo in many areas, including what we value.
Capital One Canada recently hosted the C1NDX, a consumer index roundtable and study that included six of Canada’s leading journalists and industry experts. With a specific focus on the impact of the sharing economy, we dove deep into how the financial values and spending habits of consumers have changed and are continuing to evolve.
We discovered that when it comes to how and why consumers spend their money, the values of many Canadians, particularly millennials, are shifting.
Experiences Are the New Luxury
Instead of buying things, millennials are leading the charge on spending their money on unique experiences they can share on social media. What really struck me is that 85 per cent of Canadians would opt for two years of amazing experiences rather than upgrading from an affordable car to a luxury vehicle. Even more interesting, one-third of millennials (32 per cent) would rather have five years of amazing experiences than own a house!
One of the reasons why the sharing economy has gained so much popularity is because it allows cash-strapped users to share resources like vehicles or houses at lower rates, so people can do more with the money they have. This has led to significantly altered values around ownership with almost half of millennials (46 per cent) being open to buying a house with friends and living in it together to share costs.
This is a significant departure from previous generations and has far-reaching implications for the motivations behind why and where millennials spend. Thinking back to when I bought my own home, it would be like me equating that moment of pride I felt the first time I walked through the front door to the sheer joy of posting a selfie to social media while touring a castle in France.
Trust, trends and the future of Canadians’ spending
Convenience, transparency and digital payments are also highly influencing how Canadians spend. The rise in popularity of cashless payments is enabling people to interact with their money in whole new ways. When we talked about cashless payments at the C1NDX roundtable, Michelle Summerfield from BudgetBloggess.com told us she finds it easier to budget when she goes cashless because there is a record of everything she has bought. It turns out Michelle is not alone; more than half of Canadians (54 per cent) told us using digital and cashless payments makes it easier to transact and budget monthly expenses.
It’s clear that technologies and companies born out of the sharing economy are disrupting the way Canadians define value and interact with brands. Likewise, these interactions are impacting consumers’ budgeting habits and spending patterns. As a company focused on understanding our customers’ needs, these types of studies enable us to fuel our desire to create better products, services and experiences and rewards that support and empower their lives and financial goals.
Jay Acharya is the head of Capital One’s digital strategy in Canada. In this role he pursues his passion for human centred design to develop innovative digital products that will empower people with their money. Website is here.