Twenty-Year-Olds Aren’t Spending Like They Used To
Ah, to be young and reckless. If you’re like most people these days, your probable perception of current 20-somethings is that they spend all their money on expensive beach getaways just to increase their Instagram following. However, according to a new Gallup poll reported by Marketing Charts, younger adults are actually spending less these days. Moreover, the majority prefer to save their money rather than spend it.
The latest Gallup poll looked at how much average Americans spend on discretionary purchases — meaning money spent on non-essential bills and excluding previously purchased homes or cars — each day. When the same study was conducted in 2008 the average 18 to 29-year-old reported spending $93 a day. Interestingly, in 2016, that figure fell to $74, marking the lowest average of any age group. By comparison, 30 to 49-year-olds spend the most, increasing their average from $108 in 2008 to $110 now. Meanwhile 50 to 64-year-olds stayed flat at $95 and those over 65 increased spending slightly from $75 to $78.
Granted these figured don’t necessarily mean that young adults are being responsible with their money. After all, fresh graduates are likely making less than their older counterparts, so you’d expect them to have less spending power. While that may be true, a separate Gallop survey found that two-thirds of adults under 30 say they actually prefer to save their money rather than spend it. That’s a major increase from 2006 when only 43% felt the same way about saving. To be fair, the percentage of people now saying they prefer to save has increased across the board in the past 10 years. Still, it was 18 to 29-year-olds who were the most enthusiastic about saving, leading them to top the 2016 poll.
If that weren’t enough, there’s still more reason to believe that younger Millennials are more financially-minded than their predecessors. Recently Northwestern Mutual discovered that 64% of young adults understand the importance of financial planning compared to 55% of Gen Xers and 43% of Baby Boomers. Furthermore 23% of Millennial respondents described themselves as “highly disciplined” when it comes to financial planning, again besting older generations. Lastly 34% of adults under 30 said they excelled at saving and preparing for retirement. As Northwestern’s VP of planning Rebekah Barsch remarked, “It’s encouraging to see that this generation is committed to thinking ahead and takes pride in establishing positive financial habits.”
Despite those strong figures, as you’d expect, 20-somethings aren’t perfect when it comes to personal finance. For example the Northwestern Mutual study found nearly a third of Millennials confessing to excessive spending and to blowing their budgets. Additionally nearly a quarter say they’ve hidden purchases from their partners. Still it’s clear that these young adults are striving to balance their desire to enjoy their youth while also preparing themselves for their later years.
Given the reputation Millennials get in the media and in our collective minds, it may surprise you to discover that young adults apparently have a good grasp on personal finance best practices and aren’t the spending machines you’d expect. While the generation is surely saddled with a number of financial burdens — perhaps most notably, student debt — they’re also learning from the mistakes of their parents and starting their retirement savings early. All things considered, it would seem the kids really are alright.