Millennials (those born between 1981 and 1996) are entering their prime spending years and have a significant impact on our economy and world. Collectively, Millennials in the U.S. have a spending power of $200 billion, which is set to overtake Generation X by 2020 and expected to rise. Furthermore, this generation earns a yearly average income of around $56,000, before taxes.
Although most Millennials are optimistic about their financial future, their spending and saving habits may show otherwise. Below we’ll further explore these habits and how they can impact the generation’s financial security.
Millennial Spending Habits
Millennials spend their money differently than other generations, and it helps to understand certain trends to get a clear picture of their financial state. Yes, Millennials spend on average around $47,112 each year, which amounts to around $600 billion spent by millennial shoppers in the United States alone every year.
Although Millennials only spend around two thirds what Generation Xers and Baby Boomers spend on entertainment, the bulk of their purchases emphasize convenience and high-end experiences. These costs can add up quickly when you account for impulse purchases and money spent on overpriced products and services.
Millennial Savings Habits
The saving habits of Millennials vary significantly. Think about this - one out of six Millennials has at least $10,000 saved, but nearly half of this group have $0 saved. As a whole, young millennials have saved just 15% more than Generation Z, but they have around 169% more debt. Even more surprising, just under half of Millennials spend more on dining at restaurants each month than they put into retirement savings.
What Does This Mean?
These spending and savings habits are interesting in that they are so varied. You’ll see a generation of people trying to do more with less available to them (when adjusted for inflation) than earlier generations. However, Millennials must learn the value of smart spending and savings habits to establish financial security - now and in the future.
This is where financial literacy and planning comes into play. Millennials are entering an age where they need to embrace the opportunities that are out there, such as working with a financial planner or utilizing online tools to assure they lay the groundwork today for a financially sound tomorrow. A financial planner can provide the knowledge and resources needed to help Millennials accomplish their financial goals. They also provide a piece a mind, helping them eliminate the stresses of poor spending and savings habits.
While Millennials are spending more and saving less than other generations, financial planning can help secure their financial future. With the right support, they can receive expert advice and implement smart strategies to improve their current and future financial health. Contact us at Caldwell Trust today for assistance in helping you achieve all your financial goals - as a Millennial or member of any other generation.