Reviewing Millennials’ Spending Habits

If you by any chance decide to google the term „Millennials“ you are bound to be bombarded with thousands of articles, a large portion of these writings are focused on the Millennials' finances and on the relationship between the Millennials and the economy.

The economy is an important factor in our understanding of today’s world, and it is certainly an important part of the future and future plans despite the fact that, while going through the countless articles that tackle this topic one must wonder, are they all true, and how reliable are the surveys they base their conclusions on? Well, let’s take into consideration a few different perspectives to see how this demographic is actually doing with regard to finances.

A story on this topic was recently published stating that Millennials spend more on coffee than on their savings, obviously referring to retirement plans. However, the article that caused so much fuss in the media is actually based on a Survey Monkey result. So is this kind of survey really trustworthy? According to the Consumer Expenditure Survey (CE), the American federal government’s main data source on the spending habits of US citizens, Millennials (precisely those aged between 25 and 35) on average put $5,879 per annum towards their “pensions and Social Security”. Now let’s do some math here. If you deduct taxes from that amount, an average Millennial’s annual pension contribution is $1,880. If Millennials are actually spending more than that amount on coffee per year that would mean that every Millennial spends over $5 dollars a day on coffee. Now this may be true for some of the young adults in this demographic, but let’s be realistic – most of today’s young people certainly do not spend money that way. Just think of the high unemployment rates, low incomes, and even the massive amount of volunteer work this demographic is dealing with, and it is clear that a vast majority cannot afford that.

Besides these stories, many others have been reported like the myth that Millennials are abandoning the old ways of shopping – going to actual stores to buy merchandise. According to current myth, the Millennials are the tech-savvy generation, and by using online shopping they are not contributing to the economy as much as they should. A survey conducted by Mizuho Securities, however, proves otherwise. According to the Mizuho report, based on surveying 1 500 Millennials, most of the young adults aged 18 to 35 still do the majority of their shopping in stores. As one would assume, the reason for this is that most of Millennials prefer to touch, try out, or feel products before buying them. The report states that Millennials conduct 54 per cent of their shopping in physical stores.

An even more wide-spread rumor about this generation is that they are avoiding homeownership. In today’s economy, buying a house is a huge investment. Real estate prices are sky-high while financial stability is not common among young people. But still, is this actually true? Do Millennials really avoid buying houses? The results of the above-mentioned survey show a different picture. Millennials are planning to cross that milestone in their lives, but they are waiting for the right time and opportunity. The major part of this demographic is saving money exactly for that purpose – they want homeownership. But not at all costs. Now, is that really a strategy that a financially irresponsible person would follow?

Talking about purchases – many articles have been written about Millennials choosing alternative means of transportation in an attempt to avoid buying a car. However this survey shows that buying a car is a priority for the Millennials right after buying a house.

So, according to actual data, this generation is making much better financial decisions than the previous generations. Way to go Millennials, you have the right skills and the right strategy, and the survey is backing you up.
Photo: Shutterstock

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