What are Millennials Doing with Their Money?

Millennials are making bank.

Millennials, those born between the early 1980s and the early 2000s, are estimated to have a combined global spending power of $2.45 trillion in 2015. There are about 80 million people in this cohort in the United States alone…and each year they spend approximately…600 billion dollars. While they are already a powerful force, they will truly come into their own by 2020 with their spending projected to grow to $1.4 trillion.

Millennials are fast becoming a force to be reckoned with in the market and their increased purchasing power will no doubt have retailers sitting up and taking notice. But what should they take notice of? What are millennials actually doing with their money?

They’re paying off debt

This cohort of nearly 75 million, larger than the baby boomers, have entered adulthood marked by the deepest recession in 70 years.

Millennials are different from other generations in ways that will have far-reaching implications. They have higher levels of student loan debt and unemployment while having lower levels of wealth and personal income than the two generations immediately preceding them.


Young college graduates are making less money than before and are carrying more debt. Where previous generations reached the median national wage at age 26, millennials are only getting there by age 30. At the same time, more than two-thirds of college graduates are paying off loans…loans whose average monthly payments are rising.

They want experiences

Millennials aren’t quick to splurge. They treat their money differently than baby boomers. A majority of millennials surveyed said they considered themselves as highly disciplined with their money.

They are three times more likely than other generational groups to justify a large expense if it generates lasting memories, according to Merrill Lynch, the wealth management division of Bank of America.

This probably has a lot to do with where millennials are in their lives versus baby boomers. Millennials are entering their 20’s and 30’s where they are just starting to build their lives. The majority of their spending is based on getting the essentials, or paying down debt.  At the same time, it is interesting that millennials are, as a group, after experiences rather than material items.


In that sense, they are similar to the generation that comes immediately after them, the digital natives – the cohort born into a word that has never not known computers.

On the other hand, baby boomers like to spend their money. They have the greatest wealth of any cohort and aren’t shy to use it.

They’re thinking about retirement

Saving for retirement is one of the top priorities of millennials. Even though baby boomers are socking away more of their annual salary for retirement, millennials are starting to catch up. Roughly 40% of millennials have increased their retirement savings over the last year, compared with just 21% of baby boomers. And approximately 88% of millennials said they are good at living within their means; 67% said they will save by any means necessary.

What’s interesting is that while millennials are both saving for retirement and careful with their money, which are both great things, the combination is leading some millennials to shy away from investing in high-growth strategies.

Investing in lower-risk strategies certainly makes one feel safer but with a longer time horizon than older generations, millennials have the opportunity to ride out any bumps along the road to retirement. What’s happening in reality is that millennials are seeking out “safe” investments – with a third of surveyed millennials reporting that they have allocated less than a quarter of their investable income to stocks.

They want access, not ownership

Millennials are extremely digital-savvy and that’s reflected in the way they interact with the world.

More and more millennials find their entertainment coming to them via laptops and tablets. As a result they are cutting the cord on cable TV, moving their spending to online platforms such as Netflix or Hulu. They live and buy online.

Similarly as a generation, millennials in urban centers are using cars less – relying on apps like Uber or Lyft to get them where they need to go. Millennials live on their mobile devices, a significant realization for companies that seek to ease the friction of everyday life.


The allure of “no ownership” has moved beyond cars and houses however – as companies attempt to recreate Uber’s market making abilities to other spaces such as renting electronics, tools and homes (AirBnB anyone?).

They’re hungry and healthy

Millennials are also experiencing a change in sentiment in regards to food.

Millennials are eating out a ton, spending nearly $200 a month on average. That is almost 30% more than non-millennials!

And the food they are interested in is different from previous generations. Millennials are more willing to spend on fresh fruits, organic and natural products when it comes to spending on groceries. The men and women who make up this cohort are generally more clued into their health and are making distinctions are the grocery store. It’s clear: millennials are interested in foods that are fresh, simple and healthy.

What’s interesting is that while millennials want healthy food, they also typically want convenient food. This explains the rise of fast-casual restaurants such as Chipotle and Panera bread while also explaining the decline of McDonalds.

At the end of the day it’s easy to see the profile of a typical millennial. They’re educated, trying to pay off debt while forging their way ahead in life. At the same time their relationship to the world is changing from the predecessors. The impact of the global recession is still being felt as millennials pivot away from material wealth in their search for a meaningful life.


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