Budgeting big: How millennials are shaping economic trends

Millennials in the US have more spending power than they realize. The budgeting and spending habits of consumers born between 1981 and 1996 are creating new trends, despite current economic fluctuations.

Millennials are now entering their peak spending years and they are bringing their unique blend of budget-consciousness and a preference for personalized experiences into the mix. 

If businesses want to remain relevant to this demographic, they need to pay attention to millennial spending habits. 

Impact of millennial spending

First things first: Why should businesses care about millennial spending habits? 

Because there are more than 83 million millennials (aged between 28 and 43) in the US alone. According to the department of labor’s consumer expenditure surveys, this generation can easily spend $1.9 trillion over the course of a year.

Individually, they spend about $70,000 a year, and they account for approximately 28% of all retail spending in the US. They spend more on retail than baby boomers (aged 60 to 69) and Gen Z (aged 12 to 27) combined.

That’s a lot of economic influence! 

Financial challenges and budgeting

Millennials, having survived everything from economic recessions to questionable fashion trends, have become the budgeting ninjas of the financial world. They meticulously plan every penny like it’s the last slice of avocado toast at brunch.

And thanks to their significant student loan debts, they have mastered the delicate art of financial juggling and budgeting. 

They plan their spending with the precision of a seasoned accountant facing tax season – every purchase is calculated, every dollar is accounted for.

Most importantly, millennials pay close attention to competitive pricing. They research different brands, read reviews, and likely turn to ChatGPT for a detailed analysis before they make their final decision. 

Any business or brand that wants to keep their attention, will need to understand their preference for valuing personalized experiences over material possessions. 

Experiences = 1, material goods 0

While baby boomers and Gen Xers prefer to spend their money on tangible assets – like bigger homes and flashier cars – millennials want to spend their money on experiences. 

Think dining out, traveling, and cultural events. According to research done by The Balance, 79% of millennials would opt to dine at a trendy restaurant. Only 66% of Gen Xers and 56% of Boomers would do the same.

They also prioritize comfort over convenience. This can take the form of tech, software and apps to make their lives easier. 

Think ridesharing services like Uber and Lyft, and food delivery apps like DoorDash and GrubHub. 

A millennial case study

Let me give you a personal example. When I, as a veteran elder millennial, crave a certain dish from my favorite restaurant, I have two choices.

1. I could do it the tedious way:
   1. Call the restaurant to place my order. 
   2. Make myself presentable.
   3. Get in my car and drive there. 
   4. Find parking (or maybe I won’t even be that lucky). 
   5. Wait in line to pick up my order. 
   6. And then drive all the way back home.
      
      
2. Or I could simply:
   1. Tap an app. 
   2. Pay a small fee. 
   3. Have the meal delivered right to my doorstep.

I’m going with option 2. It’s a no-brainer. And all that while I continue binge-watching my favorite series. 

Millennial spending habits: Let’s recap

Understanding how millennials budget and spend their money is crucial for businesses who want to stay ahead of their competitors. 

This generation will continue to favor value-driven purchases and brands must adapt to meet these expectations

Not sure where to start? 

GO HERE: 

• Leveraging social commerce
• The rise of retail subscriptions
• The psychology of Promo FOMO
• Target new customers with TikTok

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