Millennials love avocado toast because it’s healthy and frugal – two things that the generation born between 1981 and 1996 crave. But is that all they’re saving on? It turns out that they’re a fairly frugal generation after all. And it’s not all out of choice either. Millennials grew up when the West was beginning to decline in geopolitical importance. It was also starting to lose its vast economic clout and edge. That coupled with the Great Recession of 2008, most of them entered the workforce due to declining job opportunities, lowering wages, and skyrocketing inflation. These factors profoundly shaped their lifestyles and spending habits. Let’s explore that in more detail.
Millennials Have More of An Incentive to Save
Millennials started college when it became the ‘popular thing to do!’ Unfortunately, they entered adulthood when the average cost of college started to increase exponentially. So, they were forced to assume staggering debt in the form of student loans. The average millennial has an outstanding student loan balance of about USD 32,800.
The problem was exacerbated when they graduated. Some who couldn’t easily find jobs went to graduate school. They assumed even more debt by doing so. Others assumed lower-paying jobs because those were the only jobs they could find during and immediately after the Great Recession.
That meant that many millennials were forced to stay with their parents longer to pay off that debt. It also meant that they had to make their money stretch even further. Compounding that was the fact that inflation took off, while wages stayed more meager. The price of goods increased by 67% from 2000 to 2024. Wages only increased by 7% during that time.
The High Cost of Living Forces Them To Make Life Choices That Were Unthinkable for Their Boomer Parents
Millennials are crossing major milestones at much later ages than their parents and than Gens X and Y did. For example, many millennials started buying homes only a few years ago. The reason was cost. The average home in America now costs 100% more than it did for their Boomer parents almost fifty years ago. That has forced many millennials to either buy smaller houses or just rent.
Millennials are also turning to the Net to research brands before purchasing them. They are much pickier than previous generations. Sure, they want to buy value-added brands. At the same time, they want to buy brands that were made ethically. That’s why they prefer brands that are vegan or have the PETA certification. They are also shopping like the Ancient Romans because they want to buy goods that will last for years.
Who can blame them given just how expensive items have become in America and other Western nations recently?
Millennials Have Turned To Invest More
There’s a reason for that. They realize that, while they are forced to pay into Social Security and other social welfare programs, they likely won’t see a penny of transfer benefits payments in their lifetime. So, they are investing and saving as much money as they can while they still can.
Investopedia recently did a survey. It found that 64% of millennials are investing to fund their retirements. They are most likely to invest in Crypto stocks and currencies. About a third of millennials invest in Crypto stocks.
They Look for Security When They Save
Perhaps that’s why many millennials are stashing their money away in high-yield savings accounts. They are also addicted to Roth IRAs. They want to maximize the return on every dollar that they save.
Circumstances Taught Millennials to be Frugal
Millennials now make over $70,000 annually, and that base salary is increasing steadily. They are also steadily accumulating more wealth. However, many millennials feel as though they got the ‘short end of the stick’ economically speaking. They were dealt hard cars of soaring inflation and modestly increasing wages. They learned how to survive those circumstances by being frugal.
