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Millennial Saving & Spending Habits

Millennials, who are also occasionally referred to as Generation Y, hold a lot of perceptions in today’s society. People think of millennials as technologically savvy and connected. They value transparency in interactions, seek a healthy work-life balance, and are driven by values as much as by profits.

However, when it comes to money, this generation is surprisingly pessimistic. Their adult lives have been shaped by negative events, including 9/11, the 2008 market crash, and the COVID-19 pandemic. Severe real estate and stock market fluctuations and skyrocketing student loan debt may also be to blame for this negative outlook.

Because of the unique circumstances, millennials require different financial advice than those in other generations. They need to develop a mindset to help them navigate the economic challenges they face.

Many in this generation have been successful at adapting to the times. Thanks to their ability to adjust, their finances are in overall good shape. However, millennials continue to be confronted with financial challenges as they try to purchase real estate and save for retirement.

Millennial Spending

Compared to previous generations, millennials spend their money differently. Their spending seems to be more value-oriented than previous generations. For example, while necessities still matter, they’re more likely to spend money on experiences and conveniences instead of focusing on accumulating material goods.

Experiences vs. material goods

Millennials prefer to spend their money on experiences, such as traveling, as opposed to material goods. While building a nest egg for a home or retirement is still important, 78% would rather spend on experiences than physical items.

The source behind this change in finances could be driven by a variety of factors including social media or the general economic uncertainty that defines most millennial lives. Regardless of the reason, the travel industry has responded by offering package vacations that focus on unique experiences.

Extras and lifestyle choices

Millennials spend more on specific types of lifestyle items. For example, they are willing to purchase organic food or craft beers, even though these items could be more expensive than more common mainstream brands or options. Conveniences such as same-day delivery and rideshare services like Uber are also popular with this generation.

Millennials will match their spending with their values. Most focus on purchasing environmentally-friendly, vegan, or cruelty-free items instead of opting for the goods with the lowest price or best rating. They are also willing to spend more on personal improvement services, like fitness classes, which older generations might perceive as an unnecessary expense.

Taking on debt

Millennials also have a growing debt load. They currently owe about $1 trillion in the US. There are several reasons, including the fact that more millennials are trying to purchase homes while still contending with student loan payoffs.

In addition, millennials are managing credit card debt just like every other generation. One quarter of all millennials consider credit card debt one of their top financial stressors. For many millennials , these debt challenges make homeownership an unrealistic goal.


Millennials still struggling with student loan debts and other financial issues often choose to forego homeownership. A 2020 survey found that 18% of people in this generation plan to rent forever. This homeownership hopelessness is a recent trend. In 2018, only 11% had given up on owning a house.

Even with this trend, 47.9% of millennials do own a home. While this seems like an improving statistic, it’s still 20% lower than Generation X.

Another issue affecting the homeownership rate for millennials is the problem of unemployment or the lack of a reliable career.

Millennials hoping to purchase their first home or upgrade to a larger house need to have reasonable expectations for the type of property they can afford. They may also need to shift their spending habits so that monthly mortgage payments don’t strain their finances.

Millennial Saving

Just like their spending, millennials save differently in comparison to previous generations. Overall, they have an average personal savings of $51,300 and $63,300 saved for retirement. These figures are slightly less than Generation X and significantly less than the $102,400 that retirement-age baby boomers have put away in personal savings accounts.

While challenges such as student loan debts and supporting young children can make saving difficult, it is possible to take steps to increase savings regardless of your financial situation.

Reasons for saving

Millennials, just like baby boomers and other previous generations, have multiple reasons for saving. According to a report, 75% of millennials are actively saving for retirement. Meanwhile, 32% are reserving money to purchase a home. This group includes millennials who want to buy their first property and those who own a house but want to upgrade.

Just over 50% of millennials dedicate a portion of their savings towards an emergency fund to use in case of unemployment or unexpected expenses.

As a result of their value in spending money on experiences instead of material items, millennials are also willing to dedicate a portion of their savings towards these same goals. According to Bank of America’s survey, 42% of millennials use some of their savings for travel expenses.

Saving earlier

Baby Boomers, Generation X, and millennials all focus on saving money. However, the people in these groups started saving at different ages. The Bank of America survey found that the average Baby Boomer started saving at age 33. Members of Generation X began filling their accounts at age 30. Millennials started saving almost as soon as they finished college at an average age of 24.  

This early start makes sense when you consider that millennials grew up in a time of economic uncertainty and that a majority favor working harder now so that they can retire early.


In addition to saving for the future and retirement, millennials are also making investments to help their savings grow. Thanks to hands-on investing tools and applications, most millennials utilize self-directed investing. 

Though they are active in the market, millennials invest smaller amounts. According to the Federal Reserve, they currently account for 2.5% of all stocks in the market. The value of these holdings tops $1 trillion. That might sound impressive, but baby boomers control 55% of the market, and Generation X investors hold a quarter of all stocks.

Millennials do have access to other investment vehicles, such as cryptocurrency, and they are more likely to purchase equities based on issues, such as sustainability.


Along with establishing an emergency savings account and an investment account, millennials are prioritizing saving for retirement. They are getting ahead of issues like debt during retirement by making a retirement savings strategy almost as soon as they finish college.

In addition to saving on their own, many millennials take advantage of self-directed retirement accounts or make regular contributions to their employer’s 401(k) accounts.

At National Debt Relief, we take pride in empowering people to regain their financial stability through our proven debt relief program. Contact us and talk to a financial expert who will work with you to find the best option to settle your debt and help you achieve financial independence.



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