Should Millennials Be Given More Credit for their Money Management?

Millennials often get a bad rep when it comes to money management. Having being dubbed ‘generation debt’ with a taste for the high life, this preconception is dangerously close to sticking. With the ‘baby boomers’ and Gen X believing that it’s all chai lattes and avo on toast for the millennial generation, we explore how much of that is true.

Let’s get down to the statistics.

Millennial Spending Habits

How they spend:

• According to a recent study, a third of millenials already use digital wallets, barely half even own a credit card, and of those without, 93% said they don’t even want one.
• It’s been reported that debit cards are the preferred method of payment for all products by British millennials. A major YouGov study found that millennials are significantly less likely to own a credit card than the 35–55’s (Gen X) — at 51% against 71%.
• 75% of millennial shoppers buy online and consider it to be the easiest and most time effective way to get the things they want.
• Figures show that young people in the UK have become “credit-averse”. There’s a clear surge in demand for innovations which offer more convenience and debt-dodging potential.

What They’re Spending on

• Rent is a massive outlay for the average millennial with 65% of 16–24 year olds and 42% of 25 to 34-year-olds now renting privately. The standard UK rent is around £650 a month in city areas, dropping to £550 elsewhere. With the average salary coming in at £23,300, according to The Institute for Fiscal Studies, spends after rent and bills are minimal. Huffington Post spoke to Belle, 23, who is certainly feeling the pinch. She lives in Leeds and earns £21,600 a year as an IT analyst, but shares show the ‘payday high’ doesn’t last for long with almost a third of her monthly income being spent on her rent.
• When it comes to shopping attitudes there’s been a definite shift in what’s important for the millennial consumer. They want brands to be ethical as well as fashionable; in summary they want to buy less, buy better, buy authentic where possible. More ethically made clothing tends to be more expensive and comes at a premium. “I buy clothes every three months and spend roughly £120 a time” says Chloe, 23, a marketing assistant, who earns £18,500 and lives in Leicestershire. “I like to be up to date but I won’t spend too much” showing that conscious consumerism is high on the agenda for the average millenial.
• Night life. Contrast to popular opinion that millennials are all about hitting up the most instagrammable party spots on weekends, many surveys suggest that millennials are the party-at-home generation. This is due to the closure of many nightclubs and the rising cost of alcohol. So on the whole ‘letting off steam come the weekend’ looks much more like BYOB, as opposed to champagne, extravagance and private booths.
• Entertainment has shifted dramatically over the past decade with a plethora of options to choose from. From Netflix, Amazon Prime and NowTV to Apple Music and Spotify, the multiple monthly subscriptions soon tot up. Salim, 22, who works as a trainee dental technician and earns £18,750 shares that having a streaming service is a ‘must-have’.“You have to have it, otherwise you aren’t in the conversation about what’s current.”

Millennials on Saving

• Nine out of 10 millennials say they actively manage their money and 53% see themselves as savers rather than spenders (which compares with 35% of Gen X)
• A record number of millennials are now regularly using mobile banking apps to keep a track of their money, which has resulted in half of young people in the UK and Ireland declaring that they now enjoy handling their finances.
• According to smartphone-based banking service Revolut, seven out of 10 young adults are regularly putting money aside, with almost £174 a month being saved on average, showing UK millennials are ‘far more savvy’ about finances than they are given credit for.
• It has also been found that millennials are saving more than any other generation and are getting on the savings ladder as soon as possible.

Millennials on Debt

Carl Scheible, CEO of ‘buy now pay later’ service Clearpay sums up the fears of many millennials when it comes to debt. “The financial crash left scars on all generations and traditional banks and credit providers lost their customers’ trust. In the UK young people in particular are looking for new ways to budget and make purchases without falling into debt.”

56% of surveyed millennials admit to being in student debt which naturally weighs heavily on young shoulders. Digging a way out of post-uni financial darkness is a concern for many, so naturally there’s been a massive recent surge in finding ways which support a move towards financial freedom. Reports show that millennials are eager to embrace the latest financial technology which helps with keeping debt at bay or at least as minimal as possible.

Millennials on their Futures

It’s clear that millennials face a series of difficulties in building wealth due to the combined impact of rising house prices, insecure employment and higher debt, including student debt.

It’s also reported that almost two thirds (63%) are worried about their financial future.

To compound this, it’s thought that a third of today’s millennials are likely to be in rented accommodation all their lives.

So where do Britain’s most financially vulnerable generation go from here? As we mentioned in our previous article, drastic and lasting change happens when we are able to name the problem. It then requires positive, continuous action towards changing a pattern of behaviour and believing in a brighter future. Millennials can absolutely be let off the hook for the odd chai latte and avo on toast, seeing as it’s proving more difficult than ever to get their basic needs met.

Millennials might not be getting on the property ladder like the generations that went before them, likely because they’re unable to, but perhaps because they don’t wish to. Millennials are the people who bucked the trend and started asking the questions which now serve the next generation. Whilst stats may show that millennials are the most broke generation, their habits and beliefs certainly prove that they are the forerunners in what it means to be ‘woke’.

Thank you for reading.