Millennial spending habits are, well..
…different to those of Baby Boomers.
Millennials are next in line to become the most important spenders on the market.
That’s why millennial spending statistics are super important in 2020.
This generation has new priorities when it comes to spending their money, so…
Let’s take a look at the changes in consumer trends brought on by the changes of generations.
Millennial Spending Statistics (Editor’s Pick):
- 60% of millennials would spend more than $4 on coffee.
- Millennials spend more than $3,000 on eating out.
- 53% of millennials spend money on Ubers and taxis.
- 67% of millennials prefer online shopping.
- 84% of millennials donated to charity in 2014.
General Facts and Stats on Millennial Spending Habits
As always, we start with the big picture.
1. Only 32.2% of millennials are homeowners.
If you were wondering “What are millennials buying,” well, it isn’t houses. According to a research report by the Urban Institute, only about one-third of millennials are homeowners. In comparison, 60.4% of gen Xers and 75.0% of baby boomers are homeowners.
And it doesn’t come as a surprise considering the house market crash in 2008. As history has taught us, bubbles and finances don’t mix. And the 2008 housing bubble seems to have affected older millennials the most, as they have now become a generation of renters. Not to mention the impact your student loan debts can have on your ability to buy a house.
Besides the decrease in the general homeownership rate, there is also a delay in buying houses. A large number of millennials in the US postpone buying a house until they have adequate savings. The delay can also be attributed to the fact that people nowadays aren’t in a rush to get married and settle down. The percentage of millenials buying houses at ages 25 to 34 is around 9% lower than that of baby boomers and gen Xers.
2. Millennials will have spent more than $90,000 on rent before they reach 30.
Many millennials don’t exactly have a choice – they can’t afford houses, so they have to rent. Since the financial crisis in 2008, rent has generally increased, while incomes have decreased.
Taking this into account, it is obvious that most of the millennials’ money goes towards paying rent.
This wasn’t the case for previous generations. Baby boomers and gen Xers had better salaries in their twenties. Baby boomers spent around 36% of their salaries on rent, while millennials spend around 45%. Gen Xers also had it a bit better, with 41% of their salary going to rent.
3. 48% of millennials would spend more than they can afford to hang out with friends.
Some millennial spending statistics show that this generation is more focused on experiences rather than stuff. According to the 2019 Modern Wealth Index Survey done by Schwab, almost half of millennials would spend money they don’t have to catch up with friends.
The online survey had a sample of 1,000 respondents and included millennials, gen Zers, gen Xers, and baby boomers. The survey also asked respondents how social media affects their purchases. It appeared that millennial consumer behavior was influenced by what they saw on these social platforms: 49% of millennials responded that they would spend money on certain experiences because of social media posts.
4. 60% of millennials would spend more than $4 on coffee.
If there is one thing you need to know about millennial spending habits, it is that they like to splurge on, “excuse me, a damn fine cup of coffee,” as fictional FBI agent Dale Cooper of Twin Peaks fame would put it.
According to Schwab’s 2017 Modern Wealth Index Survey, 60% of millennials would buy a cup of coffee that costs more than $4. And it seems that passion for good coffee is a generational thing. Only 40% of gen Xers and 29% of baby boomers would spend the same amount.
5. Millennials devote 1% of their annual expenditures on alcoholic beverages.
Millennial consumers are a bit higher than the national average on this one, which is 0.9%. And yet, taking into consideration the millennial income statistics, the amount they spend is the smallest. According to the Bureau of Labor Statistics, gen Xers have the highest income before taxes.
The amount they pay on alcoholic beverages per year is the highest, too, amounting to $633. Baby boomers spend an average $595 on alcohol per year, with millennials spending the least – $521 per year.
6. 79% of millennials would eat at a trendy restaurant.
What do millennials spend their money on? Well, on good food and coffee, apparently. The majority of millennials consider eating out money well spent. In comparison, 66% of gen Xers and 56% of baby boomers would try out that new hot restaurant in town. Safe to say, millennials enjoy their nights out.
7. Millennials spend more than $3,000 on eating out.
The spending habits of millennials make them the generation which allocates the biggest percentage of expenditures on eating out. And yet, they spend the least amount of money.
Eating out costs gen Xers on average $4,229 per year. Baby boomers and millennials spend roughly the same amount, $3,245 and $3,223 respectively.
8. 73% of millennials would go see a live event.
More than 70% of millennials would spend money on live concerts, sport games, or other events. Gen Xers follow closely, with 65% willing to buy tickets for live events. And a little more than half, or to be exact, 55% of baby boomers would do the same.
And while they are more willing to spend money on entertainment, one of the harsh facts about millennials is that they can least afford it. According to the Bureau of Labor Statistics, millennials spend $579 annually on fees and admissions.
That’s half the amount that Gen Xers spend which is $1,144. Boomers are closer to millennials in this regard, with only $680 spent.
9. 76% of millennials would spend money on the newest electronic gadget.
The buying habits of millennials show that this generation values convenience. Though there are only minimal changes with every new release, we can’t deny that the latest smartphones, laptops, tablets and other electronic gadgets are slightly better than the previous version. In contrast, only 66% of gen Xers and 49% of baby boomers feel the same way.
10. 70% of millennials buy clothes they don’t need.
We can say that millennial shopping habits are bad for the environment – a significant number of them admitted to buying clothes they don’t need. As for the older generations, 53% of gen Xers and 45% of baby boomers admitted to doing the same thing.
Ever since fast fashion became a thing in the early 2000s, people stopped buying clothes because they need them and started buying them just because they can.
Some surveys show that the reason for this consumer trend could be the prevalence of social media. The 2019 Modern Wealth Survey survey by Schwab also reported that close to 60% of people pay more attention to what their friends spend money on rather than paying attention to how much they save.
11. 53% of millennials spend money on Ubers and taxis.
When it comes to millennial spending habits in terms of transport, more than half of them spend money on taxis and ridesharing services like Uber. Yet only an insignificant percentage of baby boomers do the same – 15%. Gen Xers are somewhere in the middle, with 29% of them using these services.
12. 72% hired an expert for their financial plan.
Though millennial consumers like to splurge, one-third of them are responsible in terms of financial planning. As the Modern Wealth Index states, 34% of millennials have a written financial plan. In comparison, only 21% of gen Xers and 18% of baby boomers have one.
Besides being responsible for financial planning, millennials aren’t opposed to turning to experts for help. 72% hired professional help for their financial plan. What’s more, 91% update their plan annually.
13. 30% of millennials have an emergency fund.
Less than a third of millennials have a rainy day fund that could cover a minimum of three months of their living expenses. However, we can’t say if this is indicative of millennial saving habits or of their low incomes and high expenses.
The 2019 Modern Wealth Index survey by Schwab reports that 59% of Americans are living paycheck to paycheck. To make matters worse, 44% have credit card debt or struggle to pay their bills on time.
14. 67% of millennials prefer online shopping.
This generation prefers shopping from the comfort of their own homes. According to millennial spending statistics, they do more than half of their purchases online. A significant number of them admitted that the reason for this preference is that they compare product features and prices. They also think it is easier and more convenient to research by themselves or message customer support than going to a brick and mortar store and asking salespeople for help.
15. 34% of millennials research products on Amazon when online shopping.
Stores need to keep up with the times and update their websites if they want to cater to millennial purchasing habits. Millennials like to research their products online before buying, and for 34% the go to website is Amazon. Google is almost as popular, with 32% of millennials googling info on products when online shopping.
16. Millennials spend 7.5% of their yearly expenditures on cars.
The data comes from the Bureau of Labor Statistics. According to the latest report, millennials spend a bigger percent of their yearly expenditures on buying vehicles.The reason for this is that millennial spending power is not as great as gen Xers spending power. Namely, millennials spent $3,825 on average, while gen Xers spent $5,165. This was attributed to the difference in incomes.
17 Millennials spend close to $3,000 yearly on healthcare.
The silent generation (born 1920s to 1940s) spends the most on healthcare with a yearly average of $6,619. This doesn’t come as a surprise, as the need for healthcare increases with age. By comparison, millennials spend an average of $2,894 per year on healthcare costs. This amount represents around 6% of their annual expenditures.
Healthcare costs can apparently make a big dent in millennials’ savings. According to a survey, more than 54% of them avoid seeking treatment, as it is too expensive.
18. 35% of US pet owners are millennials.
(Source: American Veterinary Medical Association)
In 2016, more than 84 million households owned pets. And 35% of pet owners are millennials, with boomers representing 32%. This makes millennials the largest demographic.
And recent millennial consumer trends show that they are willing to give the best care to their pets. The American Pet Products Association president acknowledged that millennials pay for quality products and services for their pets.
19. 84% of millennials donated to charity in 2014.
If other generations are prone to criticizing how millennials spend their money, they won’t have much to say about this. According to the Millennials Impact report form 2015 by Case Foundation, 84% of millennials employees donated to charity.
As previously mentioned, due to the difference in incomes gen Xers and baby boomers are able to donate more money. Gen Xers donate $1,212 per year and baby boomers donate $732. Though millennials donate only $481 per year, they are more generous when it comes to philanthropic causes.
20. One-third of millennials are willing to spend more than $5,000 on travel.
A 2018 survey done by Travelport on U.S. Vacation Survey shows that 1 out of 3 millennials are willing to spend more than $5,000 on travel. Though the survey also mentions that most of the respondents willing to spend that much money have incomes higher than $200,000.
Yet another online survey shows that money and work gets in the way of millennial spending habits – most of them cited costs and work obligations as reasons that prevent them from travelling.
A poll by Expedia found that millennials on average travel 35 days per year. That is more days than generation Z and X, who travel 29 and 26 days respectively.
What do millennials spend their money on?
Older millennials have similar habits to generation X and younger millennials are closer to age with generation Z.
Most polls show that they value experiences more than objects, being willing to spend more money on food, drinks, and travel. Other surveys show that social media has a great influence on millennial spending habits, as it makes them compete with their friends.
One thing is for certain – millennials are worse of financially than baby boomers and Gen Xers. According to statistics from the Bureau of Labor, millennials have higher student debt than gen Xers had at their age.
This hurts their credit and influences their ability to purchase homes. Compared to them, Gen Xers had lower student debts and it wasn’t as difficult for them to purchase homes.
Safe to say, most of them are spending their money on paying their debts.
See you around on SpendMeNot.com, everyone!