Although Millennials (born between 1981 and 1997) are known for their poor spending habits, researches have shown another positive side of the ways of saving money compared to previous generations. However, Millennials are also keen on saving for retirement. In an evolving world, and with diversity and uniqueness of every generation, preferences will keep shifting. Every generation has its unique spending habits compared to the other.
Here are the features which will give you an understanding of the different ways Millennials spend their money.
Technology As a Basic Need
Millennials are digital natives. Growing with technology makes them technology reliant. Their comfort preferences also make them view technology as a basic need. They are therefore more likely to persist in spending on technology rather than previous generations. For example, they are high consumers of high-tech phones, computers, Internet speeds and anything that would make their lives comfortable. Additionally, millennials tend to spend money on technology-related innovations like; social media, content streaming, and gaming among others.
Online Streaming Services
Pew Research Center Survey revealed that young adults are driving the popularity of online streaming content, with 61 % of respondents interviewed in the 18–29 years group indicated use of online streaming services as the only way they watch television, compared to only 31 % for cable or satellite.
A Deloitte’s 2017 survey also indicates that Gen Z and Millennials demonstrated 61 and 58 % intend to use their holiday budgets shopping online as compared to stores. The study means technology-enabled spending is typical and will continue for the latest two generations.
Leisure and Dining
Hastened by technology, Millennials are experience seekers motivated by ‘catch up with the crowd’ thrill. Trendy, fashionable, and expensive lifestyles give them satisfaction. Their decisions are often informed by other people’s reviews especially on social media, unlike the older generation. This generation uses technological gadgets, but still wants to explore traditional experiences like going to the movies and dining.
Although Millennials chat with friends and post their activities on social media, they also meet up with friends in social places to shop, dine, and have fun. Convenience and flexibility are also vital to Millennials; often, they eat in fast food shops and do not cook at home, or take a taxi to arrive early to destinations other than board a bus.
Millennials have been considered as ‘generation rent’, often preferring to rent instead of buying a home. Economic factors like the Great Recession, education debt, delayed marriages, and high rent rates among other reasons, have contributed significantly to Millennials staying away from buying homes. Some of the mentioned research statistics are as follows:
- Education Debt – increase in student debt explains 11 to 35 percent of the eight percentage point lower in homeownership for 28-to-30-year-olds than baby boomers, and 8.4 percentage points lower than Gen Xers in the same age group.
- Delayed marriages – the marriage rate among young adults has fallen from 52.3 percent in 1990 to 38.5 percent. Millennials also delay the household formation and prefer to live with their parents.
- Rent rates – as of 2017, Millennials paid the highest rent averaging at $1358. By comparison, Gen-Xers paid just $850 (in today’s dollars) in rent per month at the same life stage, and the Silent Generation paid under $500.
Unlike other generations, Millennials can be exploratory. Trying new things excites them. Millennials are likely to make purchases for things they would never use. They could compete with their friends for things like cars, tablets, jewelry, and other unnecessary items.
In spite of some alarming trends, Millennials continue to battle financial challenges from previous economic setbacks. At the same time, they appear comfortable with their spending patterns. Nonetheless, for them to succeed, they need to be innovative. Finding alternative sources of income and comprehending the importance of financial education will also be a key driver for financial prosperity.
References and Sources
1. Financial Literacy Survey. Retrieved from https://pressroom.aboutschwab.com/press-release/corporate-and-financial-news/despite-good-intentions-millennials-and-gen-z-are-demonst
2. The Rise of Generation Rent. Retrieved from https://www.finextra.com/blogposting/13688/the-rise-of-generation-rent-how-millennials-have-changed-the-on-account-mobile-market
3. Millennials Are Changing Retail Patterns. Retrieved from https://www.forbes.com/sites/tommcgee/2017/01/23/the-rise-of-the-millennial/#5cfab0465f74