Money Moves
There’s a certain rush about having an aspiration, and pursuing it, too. It’s what led me to trying my own start-up, it’s why I spend time helping others with theirs, and it’s why I dabble writing out thoughts — I’m of the opinion that if I can’t build out an idea, there must be a way of pursuing it differently.
Our typical aspirations are prescribed by an American Dream of sorts. In the upper and middle-classes of North America, we aspire to study at the best schools, work at impressive companies, marry a person you love, travel the world, have beautiful kids, retire early & give back to our community. We aspire for everything from tangible wealth and intangible feelings, to basic free time and the summit of Mount Maslow. In short, we want it all, and can probably have it too — with ample money, time and energy. That requires saving or investing money intelligently, know when and where to make time for yourself, and keep your health in check.
While pursuing aspirations will remain a constant theme for life, the details of the typical aspirations mentioned above are starting to look very different from generations before.
What made that clear for me was seeing so many of my friends and family getting married this summer. Big milestones present an opportunity to set off on a new chapter in life.
However, aspirations are expensive, so we help through gifting. Gift registries, for example, are designed to:
- Capture, showcase and divide the expense of a couple’s aspirations
- Encourage guests to contribute by making it easy to know what to buy
History lesson: the mother of the bride built the wedding gift registry in order to outfit the couple’s new house with everything from kitchen appliances to home decor. The aspiration here is to furnish a home, and the pursuit of it is done through crowdfunding, essentially. A few years later, another gift registry might be made, but with a different intention — setting a child up for success with everything from a crib to toys.
My hypothesis is that the age old institution of gifting is changing because recipients have new priorities, and technology has enabled all forms of gifts to be given.
In order to understand the future of gifting, we have to understand the recipient of the future, and the economic climate and social pressures that shaped them.
Economic Climate
The generation getting married today was born between 1980 and 1996. They faced:
- Historically high tuition rates & excessive student debt
- A weak job market that stalled return on that big investment
- Increased cost of living that resulted in renting and not settling into a place
The economic climate also necessitated living smaller which means:
- Deferring big investments like getting married, moving out or having kids
- Having smaller weddings, living in spaces with smaller square footage and having fewer kids — there’s less space or need for physical gifts, and moving them would be a hassle
Implication to gifting: gift money instead of a toaster
Social Pressures
The future generation of gift recipients grew up on technology. They are:
- Long time users of social media, and conditioned to seek validation
- Focused on achieving Maslow’s needs of belongingness and esteem
- Permanently connected to numerous social circles, making them experience driven and eager to have stories to share
These stories come from experiences they pursue: traveling to distant places, enjoying new food, engaging in different cultures, attending parties, sporting events and concerts, to name a few.
Implications to gifting: gift experiences instead of a toaster
Cash gifts are 50% of total contributions now. It makes sense to me — this generation has 20% less purchasing power than the previous generation, they have 2x as much student debt and 78% would rather spend money on a desirable experience than on a physical product. Traditional gifting is a thoughtful gesture, but it’s now missing the market fit. The new market needs liquid cash, and wants experiences.
Crazy idea: what if the future of gifting is a money management platform?
1 in 4 items on a traditional gift registry is left unfulfilled, and that’s because individual guests either can’t afford to gift a full toaster, and it’s easier to make partial contributions or purchase a store gift card.
A gift card is great for the retailer, but as a user I’d hate if money that’s gifted to me can only get me what’s on a catalog.
People have also started to be creative with cash gifts. Newly weds now have honeymoon funds, expecting parents now have college funds. I’d personally contribute more, given the straight-forward and compelling nature of those causes. Of course, whether or not the money actually goes to those causes is up to the recipient and their priorities — but it’s the flexibility that counts.
There’s also a longer lifetime value to this. If you’re a lucky kid, there are actually cash inflows all around you. Between birthday money, Diwali money and something I’ve only ever heard of in mythology called an allowance…that can amount to a lot of cash lying around.
In the new age of money management, I do see a future where Lai See is given digitally, no matter how traditional it is to gift the red pocket in China. I also see an opportunity for new credit card services that help you invest rounded amounts or give cash-back to go towards purposeful aspirations that keep people grounded in their true desires for a full life.
A kid’s first aspiration may be to save up for his first Raptors game, and it’d be cool to see him learn about financial literacy while his savings and cash gifts contribute to that rewarding cause. He’ll also look to gift money to his friends and family in that virtuous cycle. As that same kid gets older, he’ll look to save for university, and then for a honeymoon, then a Coldplay concert, or a Michelin Star meal and swanky Airbnb in the Alps. And eventually, for a kid of his own, and that’s really the constant for life.
