From the Mind of a Millennial: The Differences in Millennial Spending

Understanding where juniors and seniors put their dollars

As we know, millennials are a diverse generation. Younger millennials (think 18 to 25) and older millennials (approximately 26 to 35) — juniors and seniors, respectively — have some fundamental differences, including how much money they have and how they choose to spend it.

It’s safe to say the average 18-year-old and the average 30-year-old don’t live the same way. Differences in income, financial priorities and lifestyle are core areas of contrast between the groups. By taking a look at their shopping habits, we can further explore the differences between these groups of millennials.

In general…

Millennials came of age during the Great Recession, and this left many of us with a lack of faith in the stability and longevity of our nation’s financial institutions. This, coupled with the fact that we tend to have lower-paying jobs and more debt than previous generations, means more millennials are putting off traditional investments like homes, cars and savings.

Almost 40 percent of millennials were living at home with parents, siblings or other family members in 2015 — a 75-year high — and in 2014, the percentage of millennials living at home actually exceeded that of millennials living with a spouse or partner.

Speaking of marriage, we’re not doing that either. A Goldman Sachs study found that the percentage of young people married and living on their own has dropped by more than 50 percent since the 1960s, and the median age for marriage has risen from 23 to 30 since 1970. Clearly, we’re in no rush to settle down.

However, we are in a rush to get the latest technology, travel the world and buy fancy clothes. Millennials are spending more of their income on discretionary and luxury goods as overall financial priorities have moved away from necessities and toward experiences.

In addition, initiatives like the sharing economy have made it so that car or home ownership is no longer necessary. The burden of a large investment can be shared among a group of strangers, freeing up more income in our budgets.

Visits to space-sharing sites have jumped 169+ percent since 2014. A HitWise study calls older millennials “the space-sharing sweet spot,” as they’re more likely than any other demographic to visit such sites. Whether it’s getting a couture dress from Rent the Runway, home sharing on Airbnb or getting an uberPOOL, the sharing economy is changing commerce.

 Generally speaking, millennials are characterized by major shared values such as authenticity, personalization, health and wellness, and altruism, and we tend to identify with brands that also share these values.

But we still have some major differences…

Differences in education, income, diversity, marriage, family — the list goes on — are key elements that influence where and how junior and senior millennials spend their money. Older millennials have higher incomes, with 25- to 34-year-olds having an average household spend of $49,547 and households headed by those under 25 averaging $32,179. This makes sense considering that junior millennials are 34 percent less likely to be married or to have been married than their senior counterparts.

This income and lifestyle split has resulted in older millennials spending more on family-friendly products and items for children. Older millennials are more likely to have shopped at Babies“R”Us, The Children’s Place, Toys“R”Us and Party City.

The same study shows that senior millennials are also more likely than junior millennials to have shopped at home hardware stores like The Home Depot, and home specialty stores like Crate and Barrel, West Elm and Pottery Barn. Seniors are also far more likely to be weekly Walmart shoppers — 35 percent, compared with 27 percent of juniors.

Keep in mind that although older millennials generally have more money than younger millennials, they spend proportionally less, as saving for the future tends to weigh more heavily on their minds. In fact, 15 percent of seniors report having $10,000 or more saved, compared with eight percent of juniors.

Younger millennials tend to outspend older millennials in the areas of specialty beauty, athletic wear and experiential products. Juniors devote about 3.2 percent of their wallet share to products only available at specific stores, compared with 2.1 percent of senior millennials.

When it comes to online shopping, juniors are three percent more likely than seniors to browse and buy online, and they are less likely to head to brick-and-mortar stores. E-commerce is rapidly changing the way that we shop, and younger millennials are leading this trend. In addition, 84 percent of younger millennials say that social media influences their online shopping behaviors.

So now you know…

Given these factors, each segment of millennials — both juniors and seniors — has purchasing power. Juniors are slightly more inclined to shop online for specialty and luxury goods, especially those that they see being hyped up on social media. Seniors are the segment more likely to buy children’s clothes, toys, home goods and services. You’ll probably see them shopping for groceries at Walmart too, while their younger counterparts are heading to Whole Foods or The Fresh Market. It’s time for brands to zero in on these different segments of millennials in order to better connect with them and get them the right content — at the right time, in the right way.

Keep reading in News and Events