It isn’t always flattering that young people are front and center in financial conversations. The potential to make a real impact on the financial industry can be seen by the fact that the younger generation is tech savvy. The spending habits of the younger generation are different than those of the older generation. Businesses need to rethink their marketing strategies to better understand the needs and wants of the younger generation.
There is more than meets the eye when it comes to spending by the younger generation. They are budget-conscious and willing to do their research to get the best bang for their buck.
We have compiled dozens of statistics on how millennials spend their money, covering everything from pricey coffees to retirement savings and student loan debt. You might be surprised by the numbers. You can trust that the numbers are accurate.
Millennial Demographics
Who are millennials? Here are a few key defining stats about who makes up the millennial generation:
- Gen X and Gen Z were born to Baby Boomers and early Gen Xers.
- People were born between 1981 and 1996. This generation is often considered to be more tech savvy, socially progressive and open to change than their predecessors.
- It is the largest age group in the US. A variety of beliefs and perspectives can be found in the younger generation.
- 3 in 10 young people are married. Marriage was seen as the traditional milestone of adulthood in previous generations.
- A majority of young people have children. This indicates that the concept of starting a family earlier is being embraced by the younger generation.
- One in three of the age group has at least a bachelor’s degree, making them the most educated generation. The generation most likely to pursue additional forms of education and training after college are the coding bootcamps, specialized certifications, and language courses.
How Millennials Spend Money
Every generation has their own buying habits and preferences. They spend less on major purchases like homes, cars, and retirement. As a result of this disparity, women are more likely to make fiscally responsible decisions with their money.
They spend more on experiences like travel, dining out, and tech services that make things more convenient. These experiences provide memories that last a lifetime, making them a worthwhile investment.
The price of socially responsible brands that align with the values of the younger generation can be more expensive than other generations. Businesses that strive to do good in the world can use this increased level of social consciousness to their advantage.
They have a lot of student loan debt that makes it hard for them to buy a home. It is difficult to achieve the American dream if you have student loan debt while still trying to save money for a downpayment on a home.
Do Millennials Have Healthy Spending Habits?
Young people get a bad rap for their financial habits. They are behind some of the previous generations in terms of retirement savings, home ownership, and debt. A number of factors could be to blame, such as having to pay off student loans, rising cost of living, and an unstable job market.
Different expenses, a higher cost of living, and wages that haven’t kept up are some of the financial challenges faced by the younger generation. Financial challenges can make it difficult for young people to save and invest, making them feel unprepared for retirement or other long-term goals.
A shift to socially minded shopping and shopping that favors convenience can be seen in the way society has grown and advanced. This shift towards convenience-based shopping has resulted in a decrease in traditional brick-and-mortar stores, as more and more shoppers opt for the convenience of online purchases.
Millennial Spending Habits Statistics
There is a closer look at how and where the young people spend their money. Businesses need to be aware of their spending habits in order to remain competitive in a changing economy.
Millennials spend an average of $52,000 per year, which is less than Gen X and Baby Boomers.
According to a 2020 study, the average young person spends over $50,000 a year. The average annual spending for Americans of all ages is around $39,000. According to the study, Generation X spends an average of $74,683 per year. The average household income in the US is $63,784.
Millennials spend around $34,000 on discretionary purchases each year.
They don’t spend as much on discretionary purchases like gym memberships, streaming services, and concert tickets as you might think. Travel and dining out can provide memories that last a lifetime, so they’re focusing their spending on those experiences.
Gen Xers and Boomers spend more on their wants like entertainment than the younger generation, according to a recent report.
Millennials in Manhattan spend more on discretionary purchases than anywhere else in the country.
Manhattan’s young people have the highest discretionary spending levels in the country. The spending habits of the young people in Manhattan reflect their reputation as some of the most affluent consumers.
Here are the top counties overall:
Most Millennials spend close to $93,000 on rent in their 20s.
A 2018 study from RentCafe found that most millennials will have spent approximately $93,000 on rent by the time they hit 30.
The study found that the rent burden is higher for the younger generation. The rising costs of housing are putting increasing financial pressures on the younger generation. Boomer and Gen Xers paid less for rent in their 20s than they did in their 30s. Boomers and Gen Xers had less expenses and more financial security.
Millennials spend $164 a month on entertainment.
According to a According to a McKinsey survey, people under the age of 30 spend an average of $164 on entertainment each month, which is more than Gen X and Boomers. This suggests that younger people spend more on leisure activities than older people.
Millennials spend an average of $79 per month on cable or streaming, while Baby Boomers spend $114.
But the survey also pointed out that millennials spend $35 less to watch TV than Baby Boomers, turning to cheaper streaming services over pricey cable and satellite packages.
While millennials spend the most on apparel and shoes, Gen Xers outspend them on athletic apparel, cosmetics, and skincare.
Here’s a comparison of how millennials and Gen Xers spend on material goods each year, based on McKinsey’s consumer survey:
| Category | Millennial | Gen X |
| Apparel | $524 | $355 |
| Athletic clothes | $322 | $385 |
| Shoes | $264 | $185 |
| Cosmetics | $103 | $116 |
| Skincare | $87 | $134 |
Millennials spend 37% of their food budget on delivery and eating out.
Millennials love the convenience of food delivery apps and the experience of eating out. According to the 2020 BLS Consumer Expenditures Report, the younger generation outspends the older generation. In the years to come, this trend is expected to continue as the younger generation becomes a larger portion of the consumer market. Gen Z spends more than any other generation.
Millennials buy around $27 billion of furniture each year.
The data shows that the younger generation spends $27 billion on furniture each year, and half of them choose to buy it online.
Less than half of the respondents preferred to buy a furniture package for the whole room, and a third wouldn’t consider hiring an interior designer. For those who considered hiring an interior designer, they preferred a tailored approach over a complete package.
81% of Millennials shop online at least once a month.
The wide majority of millennials shop online—and often, according to Invesp research. According to the survey, over half of their purchases are online and they prefer shopping in-store. Almost three-quarters of the younger generation said they feel more comfortable shopping online than in a physical store.
8 in 10 Millennials say they won’t buy something without reading a review first.
Younger generations might think that they make hasty purchases, but they are all about research. They research and compare products to make sure they get the best value for their money. 80% of young people do their homework and look for customer reviews before buying.
42% of millennials prefer to use their smartphones for most purchases.
In a recent Statista survey, almost half of the young people said they make most of their purchases from theirphones. As younger generations become more comfortable with using digital devices to shop, mobile shopping is becoming more popular.
Most millennials prefer digital customer service and online research to talk to retailers in person.
According to a survey by Invesp, it is easier to chat with customer service by email or online than it is to visit a store. About half of Generation X and Baby Boomers said the same.
When they are in a store, 53% of the younger generation would rather look up product details on their phone than ask for help.
Millennial Saving Statistics
Are you curious about how much they save? According to a study by Bank of America, more than half of the younger generation save at least 10% of their income each month. How they stack up to other generations can be found here. They are making a big impact on the economy. They might surprise you.
Millennials save an average of 9.8% of their income.
According to SmartAsset, millennials have a savings rate of 9.8%, which is higher than Baby Boomers but lower than Generation X.
3 in 4 Millennials are saving for milestones and their future financial goals.
Despite all the stereotypes, Bank of America’s The Better Money Habits report found that most of the young people were focused on saving in 2020. According to the survey, young people are turning to budgeting apps and online banking tools to manage their finances.
24% of Millennials with savings have at least $100,000.
More than half of the people in the survey have at least $15,000 saved, and nearly one in four have at least six figures saved. This is a great achievement for young people who are often faced with high costs of living and student loan debt.
Millennials start saving for retirement earlier than Gen X and Baby Boomers, on average.
The study also found that the average millennial starts saving for retirement at 24, while Gen X and Baby Boomers didn’t start building their nest eggs until 30 and 33, respectively.
Spending Motivations Statistics
Let’s take a look at why.
Nearly half of millennials say they would make a purchase based on free delivery.
If a purchase was made with free delivery like Amazon Prime, 48% of young people would be motivated to make a purchase online. Free delivery is becoming an increasingly important factor for online shoppers, with more and more people expecting to have their purchases delivered quickly and without cost.
More than one in three young people are inclined to buy from brands because they have seen them on social media. Many companies are now investing in social media campaigns.
Over half of millennials are more likely to buy products described as clean, high quality, and durable.
YPulse’s The Luxury Report asked if they would be more or less likely to buy products based on the way they were described. The results show that the younger generation is more interested in ethical and sustainable products than materialistic descriptions.
Here are the top 10 words most likely to make them buy, which gives a lot of insight into the motivations behind millennial spending:
- Durable: 59%
- Clean: 58%
- High Quality: 56%
- Inexpensive: 44%
- Sustainable: 43%
- Economical: 38%
- Local: 37%
- Cheap: 36%
- Eco-friendly: 36%
- Premium: 36%
Millennials prioritize experiences and pay more for them than Boomers.
A The survey found that 4 out of 5 people are willing to shell out more money to eat at a popular restaurant.
Only 29% of Baby Boomers would pay more than $4 for a cup of coffee. The survey found that young people were willing to pay more for specialty coffee drinks and would be willing to spend more than $4 on a cup of coffee.
41% of millennials spent more on coffee than their retirement.
42% of respondents to the Money Matters Report said they spent more money on coffee than they did on their retirement fund. The retirement fund is an important part of financial planning for the future.
Nearly half of millennials say they’re more inclined to buy from a brand if their purchase supports a cause.
A lot of young people put their money where their mouths are because of their social responsibility. The impact of millennial spending is not limited to just the products and services they purchase; it also extends to the companies that are supported by their purchasing power.
Some of the proceeds from a purchase will contribute to a cause, according to a report. Many people feel that companies should be socially responsible.
And 37% are willing to pay more for products that support causes they believe in.
According to a survey by Millennial Marketing, more than one-third of young people are willing to spend more for a product or service if the brand supports a cause they care about.
83% of millennial women consider a brand’s sustainability practices when they shop.
When it comes to deciding whether or not to support a brand, sustainable issues are at the top of the list, according to a study. The majority of women from the generation said they would switch to a brand that was more sustainable even if it cost more.
More than half of millennials are willing to buy from generic brands to save money.
The younger generation cares less about brand names. When it comes to their purchases, they are more interested in quality, convenience and sustainable purchases. According to Ad Age, a majority of young people buy generic over brand names to save money. The trend of favoring generic over brand names is growing among the younger generation.
Education and Employment Statistics
The spending habits of the young people are tied to their education and income. Young people like to spend their money on experiences and products that they like. There is a snapshot of education and employment trends.
Millennials are the most educated generation—39% have at least a Bachelor’s degree.
3 in 10 Gen Xers have a bachelor’s degree or higher, compared to 4 in 10 who have a bachelor’s degree or higher. The impact of this higher rate of education on career opportunities is likely to be significant.
Here’s a breakdown of educational attainment by generation based on Pew Research’s data:
The mean disposable income for a millennial-led home in 2021 was $84,563, which is nearly $20,000 less than Gen X.
According to a The average disposable income for a household in the 21st century is $84,563. Meanwhile, the mean for a The household was led by Gen X.
While Gen X and Boomers did the same thing at the same age,millennial earnings fall far shorter when inflation is taken into account. This means that, in real terms, the younger generation is earning less than their predecessors did.
83% of millennials prioritize work-life balance when it comes to choosing a job.
They aren’t afraid to leave a job that doesn’t suit them because they seek out jobs that offer flexibility and enhance their lives.
In Flexjobs’ 2018 survey on workplace issues, 83% of millennials cited work-life balance as the number one factor when they considered a new job.
70% of millennials have at least considered leaving a job because it lacked flexibility.
According to a survey by Flexjobs, only half of older generations have left a job or considered leaving because they didn’t have flexible work options. The availability of flexible work options is more valued by the younger generation.
1 in 2 millennials has at least one side hustle.
In a recent SunTrust survey, half of the millennial participants said they have at least one side hustle, and 19% said they have more than one.
Millennials make 20% more than Gen Xers and Boomers with their side hustles.
When it comes to side hustle earnings, the younger generation appears to do better than the older ones. Side hustles are becoming a way for young people to supplement their income and gain financial freedom. The average side hustler makes over $10K per year.
Debt Statistics
Debt is one of the factors that has an impact on how people spend their money.
Millennials had an average of $100,906 of debt in 2021, up 15% from 2020.
Based on Experian’s The survey shows that the younger generation carries an average of $100,000 of debt, second only to Gen X.
The average mortgage debt for millennial homeowners is $261,225.
Millennial homebuyers had the highest amount of mortgage debt of any generation, according to Experian.
Millennials carry an average of $20,855 of auto loan debt.
Experian puts the average millennial car loan debt at $20,855, which is close to the same amount of debt carried by Gen X and Baby Boomers, and slightly higher than Generation Z.
Millennials have an average of $40,247 of student loan debt.
According to Experian, the average student loan balance for millennials in 2021 was $40,247. According to The Education Data Initiative, there is $500.5 billion of national student loan debt. It’s a big financial burden for those who have taken out loans to finance their education.
Millennial credit card debt increased by 5.2% in 2021.
In 2021, the average millennial carried $4,576 of credit card debt, which was a 5.2% increase from 2020.
Millennials have a lower average personal loan balance than Gen X, Baby Boomers, and the Silent Generation.
The average personal loan debt is broken down by generation. Increased access to credit and changing lifestyles are likely to be the reasons why younger generations are taking out more personal loans.
| Generation | Average Personal Loan Debt |
| Gen Z | $6,658 |
| Millennials | $13,418 |
| Gen X | $18,922 |
| Baby Boomers | $20,370 |
| Silent Generation | $17,334 |
Around 1 in 10 millennials would spend a week in jail to get $10,000 of debt forgiven.
The responses were crazy when they were asked what they would do to pay off their debt. According to the survey, young people are willing to do anything to pay off their debt, from taking on a second job to selling their possessions.
Bottom Line: Millennial Spending Habits
Leading brands are rethinking how they market and sell their products and services because of the role played by the largest generation alive today. This generation has embraced technology in a way that no other demographic has before, creating digital connections and opportunities that didn’t exist before.
As you can see from the statistics, the younger generation is highly educated, smart, and willing to follow their moral compass with their wallet and prioritize their well-being. They are saving for retirement younger than their parents. They do their research and create a plan for their future.
Sources:
Millennial Social Trends, Pew Research
How Different Generations Spend Money, SmartAsset
Millennial Discretionary Spending, Equifax
Who Are Millennials, Millennial Marketing
Millennial Rent Spending, RentCafe
Cracking the Code on Millennial Spending, McKinsey
2020 Consumer Expenditure Report, Bureau of Labor Statistics
Furniture Purchasing Habits Across Generations, Shoptelligence
Millennial Online Shopping Habits, Invesp
Online Shopping Device Share, Statista
Financial Outlook of Millennials, WYPR
Better Money Habits, Bank of America
How to Reach Millennials in 2021, Global Web Index
Luxury Report, YPulse
Why Millennial Women Buy, Merkle
Millennial Dilemma, AdAge
How Millennials Compare with Other Generations, Pew Research Center
Mean Disposable Income by Generation, Statista
Workplace Issues Survey, Flexjobs
SunTrust Side Hustle Survey, SunTrust
Consumer Debt Study, Experian
Student Loan Debt by Generation, Education Data Initiative
