How Do Millennials Manage Their Money?

The most talked about generation — millennials — gained notoriety for overspending on avocado toast. Here’s how they actually spend their money.

Perhaps the most talked about generation in history are the millennials. This generation has been surrounded by controversy and accused of various things, such as destroying the economy, being lazy, being in debt, and being addicted to their screens — but is this all true? Millennials have come to be associated with declining industries and negative income growth, but these issues are far too complex to simply pin the blame onto the millennials.

So what is the truth about the millennial generation? Are they in debt, lazy, and waiting for the next handout? Or are they victims of inflation, high living costs, and increased student debt? Today we will find out all of this and what are the actual spending habits of the millennial generation.

Who Are the Millennials?

Known as Gen Y or Generation Y, millennials are the group of people born after Gen X and before Gen Z. The label “millennials” is typically given to people born between 1981 and 1996. In some cases, those born in the early 2000s are included in this cohort. 

As the children of Baby Boomers and early Generation X, millennials are the first group of people to grow up surrounded by technological advances such as the internet, social media, and widespread use of mobile phones, making things such as shopping, streaming music, and international forex trading in Singapore much more convenient. As millennials entered the workforce, they experienced significant economic disruption, battling recessions and inflation, all while attempting to take formal steps toward adulthood.

The 2008 recession and the Covid-19 disruption in 2020 caused a considerable impact on millennials, combined with rising inflation, stagnated income growth, and extreme student debts — the likes of which we had never seen before. The ability to build substantial wealth and achieve the same milestones as the previous generations have been detrimentally impacted due to these external ongoings.

Are Millennials Well Educated?

Millennials are burdened with the rise of student debt, which in turn, shows that they are well-educated. In fact, millennials are not only well-educated but are the best-educated generation in history, with at least a third of people born in this time holding a minimum of a bachelor’s degree. Simultaneously, the number of those with a college education has increased, and the amount of money spent on education has also increased.

Sadly, this rise in education, skills, and knowledge has not resulted in millennials earning more money than previous generations, with the median earnings not being remarkably different compared to Baby Boomers or Gen Xers.

The comparison between millennials with and without further education is considerable in nearly every area of economic well-being. The wage difference between college graduates and those with a high school education or lower has never been more significant, giving millennials strong reasoning to attend tertiary institutions, resulting in the accumulation of student debt.

Millennial Spending Habits

Data analysis shows that, on average, this generation has found it much harder to reach the saving milestones of previous generations. Although it has been slower, the delays are not entirely down to bad money habits but rather continual setbacks that have stalled the spending power of many millennials. 

Contrary to common belief, millennials have similar — if not the same — spending habits as the generation before them. They just have less of it and have had to pay more for the essentials of life. The number one cost is housing which has continued to grow, along with the price of food and debt. Millennials have begun to save earlier for major financial goals for the future, such as retirement, and represent the largest cohort of people buying property.

How Do Millennials Actually Spend Their Money?

Millennials have been given the reputation of wasting their money, spending on unnecessary things such as entertainment and leisure much more than the generation before. Still, these spending habits are a creation of the environment surrounding them.

Millennials are spending more money than any other generation on convenience, eating out, online shopping, travel, experiences, debt, streaming services, and social impact, all bought from more socially responsible brands. Although this seems like a more significant waste of money, these items tend to cost less, and millennials are spending less on larger items such as cars, housing, clothes, and retirement than the previous generation.

Conclusion

While the spending habits aren’t all that different between each generation, the cost of doing similar things has changed dramatically. The millennials have been burdened with rising costs while trying to accomplish the same things as the generation before them. The world is changing, and the millennials are doing their best in the economic climate they have been given.