The media sure has a lot of opinions when it comes to millennials and money. Most of that news hasn’t been too favorable. Just watch the recent Fyre Fraud documentaries to see a common perspective on hyper-privileged youth willing to spend a fortune on experiences based solely on social media promotion.
Even general reports tend to look down on millennials and money. The usual narrative is that they change jobs frequently, spend too much money on cocktails and avocado toast, and aren’t investing their money wisely. However, that’s an old narrative, and it doesn’t really seem to hold water.
Recent research indicates that many millennials are more financially responsible than they’ve been credited to be.
How Millennial Spending Compares to Average Americans
Looking at the numbers, the average millennial is spending less than the average American. For example, millennials reportedly spend $325.44 per month on food. In contrast, the average American spends more than $600 per month.
Millennials spend even less when it comes to housing. The average American spends more than $1500 per month on housing. In contrast, millennials are spending less than one-third of that.
Of course, millennials typically earn less than older people. Therefore, they have less to spend. Nevertheless, this information runs counter to the narrative that millennials are overspending on pricy brunches and luxurious housing. The truth seems to be that they’re living with roommates and eating Ramen just like the Gen Xers before them did at the same age.
Millennials Aren’t Spending How You Think
Forbes dispels the myth that millennials waste their money. The media loves to hype up millennials and money waste. For example, they say things like millennials spend more on their dogs than their own healthcare. The most popular narrative is that millennials love to spend a fortune on frivolous items. However, the research says that they are spending less than other age groups on alcohol, clothing, and entertainment.
Millennials are Saving Their Money
In fact, the average millennial spends less than $26,000 per year. Many of them, particularly those working in high-tech jobs and people aggressively earning side income through social media, are earning far more than that. If they aren’t spending it, then what are they doing with it? Research indicates that they’re saving money.
- 45% of millennials are actively saving for emergencies
- 41% are saving to put a down payment on their first home
- 41% of millennials are saving for retirement
This information completely contradicts the usual narrative about millennials and money. Reports consistently suggest that this age group doesn’t invest, plan to buy a home, or look towards retirement. Yet, nearly half of them seem to be doing just that.
Forbes reports that millennials have an average of more than $12,000 banked for retirement. While that’s not enough to retire early, it’s also indicative that they’re saving more than the reports usually indicate. Plus, nine out of ten of them are participating in employer-matched retirement savings funds. In other words, they’re doing exactly what they need to do in order to make the most of their money.