Major Milestones Produce Anguish Over How to Pay for Them

Most Americans (51%) will be marking major life milestones in the next 12 months, but economic uncertainty leaves many unlikely to greet these approaching days with open arms. In fact, 3 in 5 of those consumers who anticipate reaching these milestones (60%) report the financial stress of paying for key events weighs more heavily on them than the associated emotional stress (40%) of these landmark occasions. They are facing the prospect of not being able to celebrate golden moments such as weddings, buying a home, or starting college in the manner they would like. 

The vast majority wish they had the flexibility to afford big purchases and nearly 1 in 5 (18%) have turned to Buy Now, Pay Later (BNPL) services in the last 12 months for purchases of $500 or more. Further, more than half of consumers (53%) cite financial flexibility to make such big-ticket purchases as the top benefit of using BNPL services. Gen Z consumers – whose behaviors may be indicators of developing trends – see ease of applying (41%), help with staying on budget in the future (38%), and having flexibility to make bigger purchases (37%) as the top benefits. 

To gain insight into consumers’ plans for life milestones and how BNPL services may play a role, Citizens Bank partnered with Wakefield Research to survey 2,000 nationally representative U.S. adults with an oversample of 500 Gen Zers.

• 60% of those experiencing any type of milestone in the next 10 years say the financial stress of paying for the event is worse than the associated emotional stress
• 65% have either themselves or had a family member go into debt or endure financial strain during economic recessions
• 46% of consumers who haven’t used BNPL services in the last 12 months or did not previously anticipate doing so in the year ahead likely will consider using them for purchases of $500 or more as prices rise due to inflation
• 90% identify benefits from using BNPL services
• 35% report they know very little about BNPL services
• More than 1 in 4 (28%) say BNPL services allow them to enjoy their life more 

The passage of time is often marked by key events, moments that you look forward to celebrating and sharing. In today’s fast-paced world, these milestones are fast-approaching and it is more important than ever to take the time to acknowledge achievements. In the next 12 months, nearly 1 in 5 will have a wedding anniversary celebration (18%), purchase a new home (15%), and either start college (7%) or have a child start college (7%). 

Beyond the next 12 months, more than 4 in 5 (78%) American adult consumers anticipate experiencing a major milestone in the next decade. Most prominent among these are purchasing a new home (30%), a wedding anniversary celebration (29%), and having a child start college (19%) or starting college themselves (6%). Another 12% anticipate the birth or adoption of a child and 1 in 10 (11%) expect to be married. 

Important milestones often come with substantial investment of time and money, as 9 in 10 adults (90%) plan to make large purchases for themselves in the next 12 months. The most common include a vacation (42%), a new cell phone (42%), a new laptop (36%) and new furniture (31%). Americans are also opening their hearts and wallets for the benefit of others. Marking accomplishments can encourage others on their journey to milestones that lie ahead. More than 3 in 4 (77%) plan to make big purchases for someone else in the same time period which is driven by men (80%), Gen Zers (90%) and Millennials (90%). Top items include jewelry (35%), a family vacation (25%) and a gaming console (25%). 

Already these moments can evoke mixed feelings, such as walking your child down the aisle or sending him/her off to college. But concerns over a sizable price tag can add enormous stress to what should be a celebratory occasion. A majority (60%) of those experiencing any type of milestone in the next 10 years say the financial stress of paying for the event is worse than the associated emotional stress (40%). This is more common among women (64%) than men (57%), and significantly more likely to be a concern of Gen Zers (73%) than their Gen X (63%), Millennial (60%), and Boomer (57%) counterparts.

In fact, the majority of Americans have witnessed this fiscal anxiety before, as more than 3 in 5 consumers (65%) have either themselves or had a family member endure financial strain during economic recessions. This strain is felt even more often by women (71%), Millennials (70%), and Gen Xers (70%). 

Consumers have envisioned these milestone celebrations for years. Whether it’s their favorite band playing at their wedding or buying a home in the ideal location, Americans want the opportunity to make it special and memorable. Among those that had a wedding or are planning to marry in the next 10 years, most (82%) wish they could have or had the financial flexibility to afford things such as a more luxurious honeymoon (54%), better food/drinks (40%), and more professional entertainment (31%). This is especially important to the younger generations (Gen Z 99%, Millennials 91%).

Who you marry may be one of the most important life decisions, but buying a house might be the largest purchase of your lifetime. Neary all (97%) of those planning to buy a new home in the next 10 years indicate they wish they had the financial flexibility to afford better features related to the purchase. And as the saying goes, “location, location, location” comes out on top. Buying a home in a more desirable location (66%), higher quality furniture (51%), more square footage (47%) and more smart home electronics (43%) dominate the list of desires. More than 2 in 5 (42%) mention top-of-the-line appliances. 

And for the vast majority of parents or prospective parents, merely making do for their kids is not their mindset. Three in 4 consumers expecting to welcome a child into their homes or who have already done so (74%) wish they had the financial flexibility to provide some amenity for them. These items include higher quality furniture such as a crib (41%), smart electronics like a baby monitor (38%), and top of the line accessories like a stroller or swing (37%). Men (79%), Gen Zers (94%), and Millennials (86%) are most likely to wish for these extras. 

Whether a student or parent of a student, beginning college marks the start of a new chapter of life. Among those that have or expect to take that path, an overwhelming 92% wish they had the financial flexibility to afford an item that would enhance the experience. Top mentions include personal electronics (62%), funds to travel home more often (57%) and appliances for dorm rooms (56%).

Those seeking greater financial empowerment, particularly as they encounter milestones in life, may see BNPL as a resource. More than a quarter (28%) say BNPL services allow them to enjoy their life more as do 38% of those who have used BNPL services for purchases of $500 or more in the past 12 months. Many find the ability to make big purchases through a series of often interest-free installments incredibly valuable. The majority of consumers (53%) identify having the financial flexibility to buy big-ticket items as the top benefit of using BNPL services, which is driven by those with household incomes of $75K+ (59%), married couples (55%) and those that have used BNPL services in the past 12 months (63%). Other benefits include the ease of applying for BNPL (39%), helping to budget for the future (37%), and being accepted at most retailers (29%).   

Gen Zers, who are most likely trying to establish a financial foothold, assess the benefits of BNPL services differently. Ease of applying (41%) rises to the top for them, followed closely by help with staying on budget for the future (38%), having flexibility to make bigger purchases (37%) and not having a minimum credit score to apply (34%). 

A sign of potential growth is that among those that haven’t used BNPL services in the past 12 months for purchases of $500 or more, more than half (52%) say they are at least somewhat comfortable with the idea of using them. In fact, 1 in 5 (20%) are completely or mostly comfortable with the idea which is driven by men (25%), Millennials (35%), and those that anticipate using BPNL services in next 12 months for purchases of $500 or more (56%). 

The uncertain economic environment may also lead consumers who have shown little interest in BNPL services to change their mind, and contemplate using them in the days ahead. Among consumers that haven’t used BNPL services in past 12 months for purchases of $500 or more, nor planning on using them, nearly half (46%) are very or somewhat likely to consider using BNPL services for those purchases as prices rise due to inflation. 

There are indications that BNPL services could be the wedding gift that keeps on giving. Consumers who are married or planning to marry in the next 10 years are open to using BNPL services to help to manage costs. The vast majority (91%) of those that plan to use BNPL services in next 12 months for purchases of $500 or more have at least one wedding-related item they wish they could afford, compared to 80% of those less open to using BNPL services in next 12 months. 

More broadly, consumers who have used BNPL services in the past 12 months wish they could afford more big-ticket items than those who have not. For example, parents or expecting parents who have used these services are significantly more likely to wish for extras (87%) than those that haven’t used this type of financing (70%). 

The potential growth of BNPL services is building off already strong numbers. BNPL services for the purchase of big-ticket items is proving popular with consumers, as it trails only that of credit cards and cash. In fact, nearly 1 in 5 (18%) have used BNPL services for purchases of $500 or more in the past 12 months. This is most prominent among Millennials (29%) and those who are married or in a relationship (20%). This is likely to remain steady as nearly the same amount of consumers (17%) will consider using BNPL services in the next 12 months for purchases of $500 or more. This form of payment is preferred over personal bank loans (12%) and a personal loan from a friend or family member (9%). 

Furthermore, individuals who have utilized this opportunity once are more likely to have used the service multiple times. Among those that have used BNPL services for purchases of $500 or more in the past 12 months, most (61%) have more than one BNPL loan currently, with an average of 2. Drilling down into payment preferences, these users tend to prefer loans that are structured in 4 payments within 6 months (55%).

Americans want to savor life on their own terms, which often is expressed by the celebration of milestones or rewarding themselves or others with gifts. BNPL services are seen as allowing consumers to make purchases – particularly big-ticket items – in installments and routinely interest-free, financial flexibility Gen Zers and Millennials are more inclined to utilize. 
 
With the vast majority of Americans anticipating a major milestone in the next 10 years, there will be ample opportunity for more consumers to embrace BNPL services. Even those who haven’t used BNPL services or plan to in the next 12 months are at least somewhat comfortable with the idea of using them. And while cash and credit cards seem entrenched as the leading forms of payment, increasing BNPL services awareness may lead more consumers to consider this as a viable option and empower them to enjoy their life more.