There’s a lot of internet-talk about millennials spending too much money on avocado toast and impromptu plane tickets and not enough time saving up for a house. The constant discussion about millennials' sense of entitlement encourages the assumption that millennials are spending more frivolously than previous generations. And to pile it on, the studies that show millennials are hardly saving (for retirement or for emergencies) suggests we are living beyond our means.
However, according to a new Bankrate study, millennials are actually spending significantly less on vacations and more on bills than previous generations. A millennial is more likely to spend on groceries, gas or other necessities than on entertainment. In fact, the average millennial spends just shy of $800 on groceries each month, which runs about $50 more than what older adult generations spend. We also spend more on eating out and on phone bills, which tends to enforce the expected rhetoric that millennials favor takeout and smartphones more than other generations. (Data and Postmates are both expensive, and neither really falls into the category of "necessities.") Overall, millennials spend 15% more (or an extra $2,300) than the other adult generations on food (groceries and eating out), gas and cell phone bills.
All that to say, there are two entertainment areas where millennials are skimping. We spend significantly less on travel and on television; As of now, we are reported to be spending $1,943 each year on vacation, as opposed to older Americans spending more than $2,600 a year. As for television, though millennials are the streaming generation, we spend at least $40 less per month on television. While this could absolutely be a result of cutting back, it could also be because younger millennials still rely on our parents' streaming accounts. Regardless, it's another way we're side-stepping the expense.
Bankrate credit card analyst Robin Saks Frankel says, "Millennials are typically more debt-averse than older generations and so they're less likely to buy now and pay later like the generation before them.” This is yet another reason why millennials aren’t set on booking expensive travel. Instead, more frugal travelers might opt for local trips or a staycation. It's difficult to rationalize spending money on a trip when your income is stagnant and rent prices are on the rise.
“Plus, many millennials are also saddled with student loan debt, leaving them little financial wiggle room to afford vacations,” Frankel continues. “As millennials get older and start to have families, their spending will increase on everyday bills like groceries and gas."
As this transition occurs, millennials may start to mirror the spending of older generations a little more. On the one hand, earning more and having more vacation days will allow us to take more trips. But at the same time, having a family might require millennials to cut takeout from the budget, shop the sales at the grocery store, and maybe even put all the streaming services in our names (as opposed to using a parent’s HBO Go log in).
Frankel agrees that as millennials gain more footing in their careers and pay down debt, the trend may reverse. “But I expect it won't be for quite some time. For those who follow the pattern of raising a family and buying a home, their short-term spending tends to be centered on the costs associated with having kids and household expenses," she adds.
The point here is that millennials aren't spending nearly as much as internet chatter would lead us to believe. Yes, we're eating out more than previous generations, but we're also not taking as many trips and delaying marriage as a result of student loan debt, and wages that can't stand up to the cost-of-living in major cities. This ultimately pushes millennials to spend less on fun and more on bills than previous generations.
