The Millennial Debate: Where Are They Spending?

Millennial; an overused word to describe the individuals that are influencing the way we all live our lives today.

To millennials, being a millennial should be a compliment. The word is a symbol of youth and goals; it shows the difference between you and your parents.

So what exactly does being a millennial mean? Are they as different as they seem?

Millennials can be defined as those born between the 1980s and 2000s. There is a lot of speculation behind millennials and how they’re spending and saving differently than the other generations.
Being a millennial means tearing up the carpet to find that hardwood floor the Gen-X’s once covered; it means knowing how to pull up that carpet in less than 15 minutes thanks to a YouTube video. Being a millennial means having the opportunity to do ANYTHING, no matter the cost, no excuses.

Time is money.

Credited to Benjamin Franklin, this quote still holds true today.

Here are 6 reasons why:

  • 2016 was the first year that a millennial could run for President, being as the minimum age is 35. With the average lifespan in the United States being almost 79 years old, even the oldest millennials today still have over half their lives to live.
  • The world is at the hands of the millennials. By 2020, millennials will make up over HALF of the workforce.

The speculation behind why millennials aren’t marrying, buying homes or investing in the stock market is one of the never ending debates. Why are they spending so ‘freely’ but not saving?

In reality, at the rate technology is advancing, the numbers on what we spend money on aren’t actually that surprising. Think about it, the internet wasn’t even introduced until 1983!

  • A Charles Schwab survey showed that 53% of millennials said they spend money on Taxis and Ubers, while only 15% of Baby Boomers (born 1940’s-60) do. It seems that a 38% increase in the use of Ubers and Taxis over the course of two generations is pretty normal, right?

“Right,” said the millennial with an Uber 3 minutes away who doesn’t have to worry about parking, gas, or drinking and driving, “because time is money.”

  • According to The Motley Fool, Millennials have an average credit card balance of $3,542. Gen-X, those born from the 1960’s-1980, has a balance of $6,886 and Baby Boomers have an average credit card balance of $6,889, almost double that of the millennials. Doesn’t it also seem right that the consumer who is 40 years younger would have less debt?

“Right,” said the nearly broke 20-something year old with only $3,000 in credit card debt, a full-time job, no kids, no spouse, and a 4-year degree, “because time is money.”

While they may not be able to afford a home or diamonds yet, they still have time on their side and most, if not all, are still planning to purchase a home and have already or hope to buy a car. Many times, the only thing stopping them from buying a car is because they have a vehicle in their parents name.

  • A luxury that wasn’t as accessible before and during the 80’s and actually can be saved today is time, so who better to save it than millennials? Millennials are always on the go, whether it be going to school, a full-time job, a side-hustle, or all three, they’re always willing to do whatever it takes to save time.

Of 3,064 interviews conducted by Fiserv, millennials used online mobile banking apps 8.6 times a month whereas the other generations only averaged only 3.1 times per month. Again, millennials are more concerned with getting the information they need faster than taking the time to drive across town and make transactions in person.

According to a 2015 Census Study:

“Earnings for young adults who work full time are about $2,000 less than earnings for young adults in 1980.” The analysis also found that millennials are more likely to have a college degree than Gen X-ers did in 1980, yet there are also higher numbers of millennials living in poverty vs. their counterparts in 1980.”

  • Money in currency form is scarcer for the millennial generation; they aren’t just putting it anywhere. If switching to a credit union from a bank for better rates and easier, faster mobile banking is an option, they want to take advantage.

The plan is till the same, it’s just happening at a different time. After all, housing still makes up for over half of household expenses, yet today, we have access to double, if not triple, the amount of expenses that consumers did in previous generations.

The below photo shows that while millennials have proven to be leading different lives, all expenses are generally spilt up the same overall; It’s WHEN they are spending that makes millennials different and how much. The difference in price is actually pretty normal, given the circumstances for each generation.

At the end of the day, all consumers are spending money and everyone is trying to save money. Some consumers have more, some have less, but overall it’s all being split up the same. It is very difficult to truly tell the financial difference from generation to generation when only looking at the numbers.

We’re all buying houses, we’re all buying cars. The only difference is when, and possibly the make and model, but that’s a different story.

The only truth that sets the millennials apart from their counterparts is time. They are concerned with time in the short-term and patient with time in the long-term. They’re more concerned with convenience and more conscious about where they keep their money.

Some possible misconceptions about millennials that disagree with this graph:

  • "Millennials spend more money on entertainment; Netflix, wifi, Hulu, Apps, etc."

Actually, it’s Generation X spending all that money. One, because millennials are still using their parent’s Netflix and two, because in the 80s, entertainment just came in different forms.

  • "Millennials aren’t buying homes."

True, but not true. They may not be buying, but they’re still paying the cost of living, according to the above infographic.

“Travel now, buy a home later,” posted the Millennial with the dog ears Snapchat filter using Wi-Fi aboard an international flight to Paris. #Travel #OnlyYoungOnce

  • "Millennials ruined good fashion."

It’s true that the demand for fast fashion sparked during this era, but the baby boomers and Gen-X’ers are technically the ones who’ve taught this generation to be frugal. $30 for a single blouse is simply not feasible for a stylish, mid-20s female with an entry-level job in 2017.

To conclude, what exactly makes up the ‘All Other Spending’ category?

If millennials aren’t investing, not spending more on entertainment or going out, then what could it be? Travel, perhaps? Student loan debt? If so, maybe the real difference between millennials and the previous generations is more than just time. Maybe that’s a topic for next time.