Studies put millennials as the highest spenders in the economy as they climb into their prime earning; they also tend to spend more. Spending could be on dressing, food, houses, family, businesses, plots of land, etc. therefore, the corporate world would try to target this growing market by aligning production to the tastes and preferences of this generation of people.
Marketing strategies, product designs, and branding, and other specifications about the economic produce try to match what the millennials want. Unlike the earlier generation x, Millenials have different preferences and different spending habits coupled with the purchasing power. These dynamics make this generation a unique consumer, which drives the consumers to tune production towards their demands and spending habits.
Millennials are the individuals who make up the most significant part of the population that were born between the years of 1982 to 1996. It is sometimes known as generation Y or just gen Y. A majority of them have fewer savings; some even do not have a penny in their savings account with others averaging at $1000. Financial reports put figures of up to 65% of the millennials who do not have credit cards.
These numbers reveal that generation X had more borrowing compared to this generation. This sharp decrease may be attributed to the tighter requirements imposed on the acquisition of a credit – though they can borrow money online and making sure they compare rates by visiting loanadvisor.sg to get the best deals for them. Therefore, it is harder for millennials to be granted credit hence fewer debts and fewer vehicle purchases.
Millennials on spending decisions
This generation pays attention to the environment and their social obligations while considering their spending. Therefore, companies have to put these in mind while producing commodities. Most of these youth agreed to cut the number of flights they take if it proved a health hazard to the environment.
Brands have to invest heavily to meet all these specifications. It was also reported that they were willing to pay an extra buck if what they were purchasing was environmentally friendly than the cheap substitute.
Furthermore, millennials’ spending habits are also anchored on peer purchasing and their instincts. They would instead take spending advice from their friends or check out what their peer is spending then having their parents or the financial experts give them a lecture on how best to manage their finances. However, they will stick to quality, trust, genuineness, and choice.
Additionally, millennials consider price more than they value brands. For instance, if a ‘Polo’ user were to get say a 30% discount from ‘BOSS’, they would switch brands there and then. Figures put about 65% of the millennials are most likely to change brands over discount offers.
However, some will cling to their brands as long as they treat them well. To tap on this, companies will offer custom discounts coupled with excellent customer service and include loyalty programs to enhance their market base.
Also, millennials consider it a fair deal when companies give back to the society – they think profits should not be the exclusive goals for the brands and that they should better the environment and the localities they are situated. Therefore, brands should align their organization goals with authenticity, quality, excellent customer experience, and returning to the community.
Compared to the older generations of X and boomers, millennials appear to be the highest spenders in luxuries and conveniences. This is how they fare in the different categories.
- More than 60% would pay more than $4 on a cup of coffee.
- A majority will pay more to eat in a lavish restaurant.
- About 70% of them will buy clothes which are not even necessary.
- At least half of the entire millennial population admitted to spending on utility rides and taxis. Only 29% and 15% of Gen X and Boomers respectively did the same.
Highest annual spending
Annual expenditure among the millennials was highlighted in the order below.
- Eating and drinking joints
- Food deliveries
- Skincare and hair products
- Mobile phones
- Online subscriptions
- Hobbies and adventures
Least annual spending
In comparison to older generations, Millenials spend less on;
Today, news and many other programs are streamed live on any electronic. Including smartphones. Therefore, cable subscriptions have now become a thing of the past.
Most of the millennials cannot afford to go on regular vacations since they are unable to save for them.
Most do not have families, and if they do, they are young families, so they spend much less on medical costs.
Building materials and furniture
Due to stringent measures put on loans and mortgages, it isn’t effortless for Millenials to afford a home or even to construct one. So, they live in rentals.
Why Millenials are considered as high spenders
While it is true that Millenials make up the highest percentage of the working population and that for every three dollars spent, one is a millennial, why are their spending statistics weightier than the earlier generations?
For starters, boomers got free college and university education. Millennials had to grapple with student loans, which keep earning interest on them. It, therefore, becomes apparent that monthly repayments will account for some percentage of spending statistics. These loans further present a stumbling huddle in saving. Millennials are also disadvantaged in an attempt to save for the housing.
Statistics show that almost 60% of individuals between the ages of 18-26 in the older generations had houses compared to just below 20% with millennials. This has, however, been attributed to the prices of the homes which have skyrocketed in the recent past.
It was reported that in the 1970s, the value of a house was about five times the average household revenue. It was cheaper and easily affordable. This cost was unlike the eight times the total income of the household the millennials have to live with. Studies indicate that employment patterns have seriously changed in the recent past.
Unemployment statistics seem to have drastically increased from the 1970s. Due to these technicalities, the youth are finding it difficult to save and have enough money in their pockets to spend.
It has been widely established that Millennials are frivolous spenders than their parents. This is, however, not true. We have seen that their spending depends significantly on the condition of the environment and their tastes.
Furthermore, millennials inherited hard times. Millennials have grown into these hard-economic times and adapted and appear to prioritize more on the hard-financial burdens they encounter.