People born in the 80’s and 90’s are dubbed ‘Generation Y’ or, more popularly, ‘Millennials’. This generation is changing the world economy, one step at a time, as we see it today.
Millennials, having overtaken the generation of baby boomers in terms of size is set out to be the biggest trendsetters of our world today.
Growing up during the last economic recession, the spending habits of Millennials are making ripples in the economy. However, while some of their spending habits may not necessarily lend themselves to future financial security, the financial track record of this generation is not all bad.
‘Real’ Advertising
Ever since Millennials have entered the spending market, patterns of advertising has changed rapidly.
Millennials do not like having advertisements shoved in their face. Growing up during the era of commercialized shorts before watching a video or having pop up ads appear when making a purchase, Millennials are sick of these intrusive ads. They do not want advertising to appear when they do not want it. If they feel the advertising lacks authenticity, it may lead them to draw back from trusting a company or a site.
Instead, Millennials prefer campaigns and non-traditional advertising that incorporates users as part of the advertising campaigns. This pattern can be seen in contest and marketing campaigns that go viral in order to get users behind the company or cause. Many Millennials agree that this experience is much more personal and inclusive.
Millennials also prefer to connect to advertising campaigns via social media. With their emphasis on authenticity, they prefer blogs that connect with people.
Homeownership
When the last economic recession hit the world, Millennials were one of the groups that were heavily hit by the blow. One of the biggest challenges they faced was surviving in the property market that crashed in the past few years.
Surging property prices have made the option to rent far more attractive compared to buying a house for Millennials. According to the Head of World Research for Savill, Yolande Barnes, there is a new trend emerging in Malaysia, where most millennials are opting for alternative townships located on the outskirt of large city due to expensive nature of property.
Moreover, based on a survey by RealtyMogul, it has become a trend among Millennials to delay marriage, as most prefer to get married in their late 20’s and early 30’s. This, in turn, affects their preferences where homeownership is concerned, since they do not have a reason to buy a house as they are not expecting family.
Millennials are also more likely to spend money on travel. Based on their passion for travelling, renting a house makes more sense for Millennials compared to actually buying one.
Dining Out
Unlike the generations before them, most Millennials are no longer opting for home-cooked meals because this generation believes in dining out, and they spend a lot on restaurants and cafés. Millennials also tend to spend more on specialized food and prefer organic materials in their food. For example, based on research by Bernstein Research analysts in 2017, there was a USD 140 billion surge in the US Food and Beverage industry, and their top consumers were Millennials and Generation Z.
Millennials are shown to spend much more on their dining-out experience and their coffee-drinking habits. Based on a survey by Charles Schwab Corporation in 2018, 60% of Millennials buy a cup of coffee that costs more than USD 4, compared to only 40% of Generation X’ers or 29% of Baby Boomers. The rapidly increasing number of cafés and coffee chains in Malaysia over the last 20 years suggests that the situation is much the same here.
Retirement and Savings
There is one aspect of the spending habits of Millennials that has since impressed experts and economists around the world: Millennials are likely to spend much more on their retirement and savings compared to previous generations. They begin to save for their retirement during 20’s. This is definitely a new and fresh trend that most Millennials have already started following.
It is more likely that 30% of Millennials have a financial plan. In addition to that, Millennials, in fact, did set up a financial plan with the help of a financial advisor and tend to update it every year, as reported by Charles Schwab.
In fact, in Malaysia, 64% of the millennial generation are saving from their earnings (quoted from says.com, “Are Malaysians Between 25 – 35 Years Old Financially Screwed?”). This indicates that young generation are aware the importance of saving money for their future.
The Takeaway
The takeaway from this is that, despite their shortfalls when it comes to spending, Millennials apparently know how to spend their money and what to spend it on. Their spending habits reflect that they prioritise on what they see as best for them and their well-being.
The spending habits of Millennials must be viewed bearing in mind outside factors such as rising student loan debt, lower salaries and even the ‘gig economy’, which centres on temporary positions and short-term contracts. These factors, alongside the spending habits of Millennials, definitely play a role in the financial stability of this infamous generation.
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