Millennial Money Habits Change With Age
Google’s online dictionary defines “millennials” as persons reaching adulthood in the early 21st century. They define the birth years as starting from the early to mid 1980s to the late 1990s, and into the early part of the 2000s. Those of us who are older usually see people in their 20s as being part of this demographic.
At the onset, we can definitely see a shift in their spending habits compared to generations that came before them. They are less tied to traditional, “concrete” acquisitions like homes and cars, opting instead for a more spartan, and mobile lifestyle. They don’t want to be tied down. They prefer having experiences to having things.
While this trend has manifested itself for some time now, the pendulum may be starting to swing back. We can see millennial money habits change with age.
What Are Millennials’ Spending Habits?
To sum up, millennials place more value on experiencing life rather than pursuing material ownership. This is the generation that made Uber a household name. This is the generation that started to ditch cable for online streaming services like Netflix and Hulu. They also relied more heavily on their cellphones and other handheld devices, forsaking the bulky desktops, and started the demise of the landline phones at home.
They rent, rather than own. They save for travel, not for cars. They are perfectly comfortable with ride shares and Air B&B. They would rather order online than have to go to an actual store to buy stuff, although, there are still limits to what you can buy online.
Members of this generation usually do not carry cash. While they do use their cards, they are also increasingly relying on technology to exchange payments. They use apps like Venmo that allow users to send payment directly to a vendor’s account, or pay their friends when they’re splitting the bill after dinner.
This is not to say that they’re more careful with their money. Ignorance when it comes to finances is not unique to any one generation. It’s in the way that resources are exchanged, how they purchase their needs, and what items they deem important enough to spend money on, that separate them from the generations that preceded them.
What Caused The Shift In Attitudes?
The Great Recession that occurred at the tail end of Bush 43rd’s presidency saw many family homes foreclosed, jobs lost, and retirement funds vanish. For many millennials who came of age during this tragic time, seeing their parents struggle to keep their families above water left an indelible impression on their psyche, and they are not prepared to repeat, what they see, are the inherent flaws in their parent’s traditional life choice templates.
For them, the acquisition of things became secondary to traveling and experiencing life. What’s the point of working all your life for things that economic downturns can only take away? Their parents spent a lifetime saving up only to lose those retirement funds when the banks imploded. Homes that have been nest eggs for most older couples were foreclosed, or worse, sold at well below their remaining mortgage values.
This fear of losing their acquisitions because of fluctuations in the market that they cannot control scared a lot of them into changing their spending habits, moved them into reassessing their priorities. I mean, what happened should scare everyone. But the recession affected this generation more because they are at the start of their productive years. For them, making these changes now made sense.
Why Will Age Be A Factor For Another Shift?
But everyone ages. And with age, comes a measure of stability that also forces individuals into again, reassessing their priorities, and tweaking them to suit their current circumstances. Let’s face it, maturity affects us as well as our spending habits. And we can see the beginnings of this change today.
As millennials grow old, they settle into careers, jobs, professions, just like their parents. And somewhere along the way, a lot of them marry and have kids. And one thing married couples with children would like to have is a home to raise their children in. Preferably in good neighbourhoods, where crime is down, and the educational system is great!
And when that first big ticket item acquisition occurs, the floodgates will have opened, and a cascade of new purchases will inevitably follow.
Areas Where Spending Habits Will Swing Back
The National Association of Realtors pegged millennials as the largest group of home buyers in America in 2016, and for three years before that. Renting when they were single may have made sense, or having roommates, or renting a small room as opposed to an entire flat. But children require space. And so, home ownership becomes a new goal, simply by necessity.
But it doesn’t stop there. Now they will need cars. And car manufacturers are aware of this growing trend. Knowing that this generation is more committed to energy efficiency and the environment, they are now developing and producing more energy efficient vehicles targeted mainly at the millennial generation. This generation is more trusting of new technologies than those that came before them. In fact, they drive development, with their ever-increasing need and desire for “the next new thing.”
And with the trend in home buying going up, the need for other “acquisitions” for the home also increases. You know, things like appliances, furnishings, kitchenware and other stuff that make today’s homes livable.
One area that millennials have not really left is spending on retail items. All their electronic gadgets, clothes, shoes, are purchased either online or through an actual store. However they make their purchases, they do consume products and this trend can only continue to grow, as this generation becomes more financially stable, and more willing to purchase more with whatever disposable income they may actually have today.
Age And Money
Cindy Lauper had a song called “Money Changes Everything.” One passage goes like this. “Money changes everything. We think we know what we’re doing, we don’t know a thing.”
Well, the message I’m trying to impart isn’t quite that pessimistic, but you get what I’m getting at. Age changes one’s perspective about money, and the acquisition of “things.” As millennials grow old, they’re values and priorities will change, too.
Remember the hippies who wanted to bring down the “system” during the late sixties and early seventies? They did not care much for material things, either. But that generation grew into the parents and grandparents of today. They were the ones most affected by the great recession that peaked in 2008-09. And you see what happened here? As they aged, their priorities changed. As they got married had jobs, had kids, their views on material assets changed, as well.
And these changes in spending habits are cyclical. They come and they go. And those changes fuel economic activity that allows each generation to live comfortably, secure in the knowledge that their “things” will make life bearable for them and their love ones.
But because they are witnesses to the ravages of the depression, many are wary of tradition, anyway. And this spills over to the type of jobs they sometimes gravitate to. Many millennials are more open to new, non-traditional economies, often internet-based, and working for themselves rather than for someone else. They are more willing to explore mentors who will guide them, help them develop their own businesses rather than being someone else’s employee.
One such mentor in helping them build a website and make money online is Wealthy Affiliate. It has helped thousands of members like us earn by capitalizing on the 3 billions plus internet users and consumers.
As they move into the next phase of their lives, millennials will be a major spending block, driving the economy forward. And manufacturers and businesses need to take note if they are to benefit from these changes.
Are you one of those Millenials whose money habits are changing? Or do you notice a shift in the Millenials lifestyle? I’m interested to know what you think. Please feel free to write your comments below. Thanks!