One of the best payment options out there or a convenience that can lead to irresponsible spending? Regardless of what we think of the Buy Now Pay Later (BNPL), it would seem that this option is particularly popular with the younger generations.
BNPL basically allows us to make a purchase and then pay for it at a later date with no interest charged for a certain period (usually a few months) or pay for it in installments. This payment strategy has clear appeal, but that doesn’t quite answer just why is it so disproportionately more popular with the millennials and the Gen Z than Gen X and boomers?
Well, there are a few reasons. Allow us to explain.
Millennials and Gen Z have less money to spend
Let’s start with the obvious: young people have far more financial struggles than their parents, and there are several factors that are influencing this. Despite popular misconceptions, none of the reasons are related to laziness.
Millennials are hit the hardest because they’re the generation that’s struggling the most with ever-increasing debt. The majority of this debt is related to student loans, but mortgages, car loans, and medical bills also play a role.
The economy right now simply isn’t what it used to be, either. Most people are still feeling the after-effects of the Great Recession, and the world has just plunged into yet another global recession induced by the rampant worldwide pandemic. The economy is growing much slower than it did for previous generations, and we no longer live in the times where working a part-time job during highschool can afford us a car. Rent and mortgage prices are also higher than they’ve ever been.
The reason millennials and Gen Z are so fond of BNPL is because it allows them to buy something they otherwise wouldn’t be able to afford at all. The main reason is as simple as that.
There are some genuinely good deals out there
While BNPL might sound like an irresponsible way to spend, this is simply not the case. It can, in fact, be a really great payment option, as long as you choose the right service provider.
In certain countries BNPL is even more present. For example, young Aussies can easily find good deals, and it’s helping them build their financial stability bit by bit by making smarter options. There are interest free credit cards in Australia, a popular financial product that gives those carrying it the option to pay up to 110 days later. In America, there are websites like Afterpay, Klarna, and Sezzle that give users some similar options.
Convenience also plays a role
Same as any payment trend, BNPL is simply a convenient way to purchase desired items with no fuss involved whatsoever. Bear in mind that while the sheer convenience of paying for something you want at a later date can be great, it can also lead to debt if you aren’t careful.
BNPL shouldn’t be used in instances when you want something, have no means to pay it, and have no hope of paying it even in a few months. You need to come into it with a plan: examine your finances and see what kind of payment plan you would benefit from. If BNPL services allow you to split the cost of something into interest-free instalments or pay at a later date when you’re certain you’ll have more money, then it’s a great idea. If this isn’t the case, then you should probably abstain from the purchase.
It allows the younger generations to plan their finances better
As we’ve pointed out, BNPL gives you new financial options that can allow you to purchase something you want. While this can certainly be used in cases when you seek to buy something trivial, for most millennials and Gen Zs this can make a world of difference in the way they plan their own financial stability. Young people can use this option to pay off debt and plan for the future, and with a few more financial tips they can be well on their way to building up their savings and increasing their wealth.
The Buy Now Pay Later service can be a great tool or a potential debt trap, depending on how you approach it. Keep our tips in mind when you use this service and it will surely be advantageous to you.