Every generation has its own identity. Technology evolves, as does how people work, what they value, and where they live, play, shop and eat.

Each generation also treats money differently.

Those who grew up during the Great Depression and then had to ration during World War II remained frugal their entire lives.

Baby Boomers, on the other hand, made up the first consumer generation. They grew up in the television age, and were exposed to mass media, which fueled spending. As they grew up, they bought cars, houses, insurance and retirement products.

Generation X did much of their growing up during booming 1980s and 1990s. Image and materialism characterize this small, self-reliant generation, who emphasize quality and uniqueness when making purchases.

Millennials: A large and diverse generation

The generation of Americans born between 1982 and 2000, known as millennials or Generation Y, are the largest living generation, according to the U.S. Census Bureau. They are also more diverse than the generations that preceded them, with 44.2 percent being part of a minority race or ethnic group.

Just as every other generation, millennials live life a little differently than those who came before them.

That includes the ways they spend money. Although there are exceptions, below is a general overview of millennial spending habits.

A rough start to their adult life

By the time millennials hit the workforce, the economic expansion of the 1980s and ‘90s had ended. Their early earning years coincided with the early 2000s tech stock bust and the 2008 Great Recession.

Therefore, they had to fight high unemployment and stagnant wages after many accumulated student loan debt. The recession left over 15 percent of millennials in their early 20s out of work. Many still struggle to get ahead financially. In addition, the down markets prevented many Baby Boomers from leaving the workplace, making it difficult for millennials to advance in their careers.

The economy has been strong the last several years, giving millennials a little more economic security, but not enough for them to make large purchases.

Seven out of 10 respondents to a recent survey from the American Institute of Certified Public Accountants defined financial stability as being able to pay all their bills each month.

Millennial spending habits are influenced by debt

According to Northwestern Mutual’s 2019 Planning & Progress Study, the average millennial has amassed nearly $28,000 in personal debt. This doesn’t include mortgage debt.

Based on other estimates, nearly two-thirds of millennials have more than $10,000 in student loan debt.

More than half carry over balances on their credit cards each month. The same percentage said in one survey they were concerned about defaulting on a loan in the following year.

It’s no surprise that nearly half of millennials said they live paycheck to paycheck, and the same percentage do not have a retirement account.

Millennial spending habits are influenced by housing choices

It’s also easy to understand why millennials are delaying home ownership more than previous generations. According to the Urban Institute, only 37 percent of millennials between the ages of 25-34 own homes. Baby Boomers at that age had a 45 percent ownership rate.

At the same time, because of the high cost of rent in many markets, millennials spend about 35 percent of their annual income on housing.

Millennial spending habits include some indulgences…

About 60 percent millennials said will buy a $4 cup of coffee, according to the Charles Schwab's Modern Wealth Index for 2017. By comparison, 40 percent of Generation X members said they would. Only 29 percent of Baby Boomers do.

Eating at popular restaurants is another millennial habit. The Schwab study showed 79 percent spend money on dining out at hotspots. That compared with 66 percent for Generation X and 56 percent for Baby Boomers.

In addition 76 percent like to spend money on gadgets, while 69 percent buy clothes they don’t need.

…But they also know how to be thrifty

Though they have a reputation for frivolous spending, they aren’t above saving money on purchases. According to one recent analysis, 94 percent of millennials use coupons. Furthermore, 60 percent prefer generic products over name brands. Of those who buy name brands, 66 percent said they would switch brands to get a 30 percent discount.

They also try to save money on streaming services. According to Anatomy Media, three out of five millennials use a shared password or login to stream content online.

Millennial spending habits should include disability insurance

They’re paying off debt and living paycheck to paycheck. So what would happen to the typical millennial if that paycheck stopped for a few months or longer because of an injury or illness?

According to the Social Security Administration, about 25 percent of 20-year-olds will become disabled at some point before reaching age 67.

Disability insurance covers the potential loss of income caused by injury or illness. If you are unable to work because of a covered disability, the policy will replace part of your income. You will receive these benefits for as long as you’re disabled or up to a maximum period of time spelled out in the policy.

Having disability insurance means being able to buy food, pay bills, and cover household expenses while you’re unable to work.

It’s insurance all generations should own. But the advantage that millennials have over older generations who may not be covered is that they can buy it cheaper because of their younger age.


Jack Wolstenholm is the head of content at Breeze.

The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.

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