Shifting Millennials’ Savings Mindset in the Gig Economy

I came across an article on LinkedIn today in reference to how many millennials have $0 in savings. The number is staggering according to this report.

46% of millennials aged 18–24 currently have $0 in savings.

The comments on this article are very telling as well. They indicate that millennials are paying down school loans and focused on experiences.

I spent some time doing more digging to find out how well millennials are savings for things such as retirement, since compound interest plays a huge factor in savings when you are in your 20s.

According to this article Forbes put out recently, only 37% of millennials are are developing savings for retirement, compared with 55% of their gen X and baby boomer counterparts. The piece goes on to show that millennials are saving, but not for distant goals such as retirement. Their savings focus is on near term experiences.

81% of millennials are saving and spending their savings on travel activities.

In a previous blog post, we discussed the rise of the Gig Economy and non-permanent jobs within this new economy.

Paul Krueger notes, that of the 10 million net jobs created <over the period of 2005–2015>, 94% were in the alternative work category, and most of the increases came from independent contractors, freelancers, and contract company workers. This tremendous growth of the gig economy (at 0.5% and growing) came as a surprise to researchers.

Given the rise of the Gig Economy and a generation of workers that want to save, but who are focused on near term goals, what is a good approach to savings?

GigLabs is taking these trends into account and offering a number of smart contract savings instruments for Gig Economy workers. The GigEx, which is our core blockchain platform, automatically contributes money into various savings buckets as workers perform jobs (the buckets are simply smart contracts).

For the Beta launch of our platform, the initial buckets will include vacation and retirement. These buckets are built to satisfy the short term savings goals mentioned earlier.

The vacation bucket is designed to be accessible at the end of each year to help satisfy that desire to save for experiences. All workers who perform gigs will automatically accrue vacation.

As opposed to the vacation bucket, which all workers automatically receive, the retirement buckets are opt-in. Workers can choose to allocate a certain percentage of their income into retirement buckets, which have payout options of 1 year, 3 year, and 5 year time frames. Workers will be incentivized to save in the retirement buckets so that they can take advantage of the automatic match given by the platform. The size of the match increases for the longer term plans, so workers are incented to choose the longer-term vehicles.

Does this mean someone can retire after 1, 3, or 5 years? Of course not. It can be looked at as more of a mini-retirement. A mini-retirement gives workers the ability to take a few months off every few years and pursue some of the elusive experiences that they crave, such as traveling or pursuing a hobby. Workers who don’t want or need the mini-retirement can choose to take these funds upon maturity, and roll them over into traditional savings plans, such as actual retirement plans.

For more information on what GigLabs is doing and the GigEx project, visit us at giglabs.io.