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20-Somethings Are Spending Less Money Than You Think

Article Found on BusinessInsider | Written by Tanza Loudenback

American millennials aren’t spending as much money on clothes, avocado toast, and pumpkin spice lattes as you may think.

Instead, they’re shifting their spending to focus on necessities, as housing costs increase and wages sit still.

According to a recent Gallup poll, 18-t0-29 year olds in 2016 reported spending an average of $19 less on a given day than their 2008 counterparts.

This could pose a problem for some retailers whose marketing efforts aimed at millennials have become obsessive in recent years.

Twenty-somethings say they spent less money on the whole in 2016 than the year before, and their paycheck is now going toward healthcare, utilities, and groceries, rather than discretionary items, like dining out, leisure, and travel, according to the poll.

Gallup suggests a few reasons for the shift in spending among 20-somethings, including:

Gallup reports that since the recession, sluggish growth in consumer spending — which accounts for about two-thirds of America’s GDP — may be due to these changing habits, considering young adults are responsible for 28% of all daily, per-person consumer spending.

“Many industries will need to re-evaluate the important young adult demographic to determine the best way to gain a larger piece of a shrinking pie,” write Gallup reporters Sean Kashanchi and Jeffrey M. Jones. “This may be especially true for retail if younger consumers continue to price shop, purchase goods online, and spend less on discretionary items.”

But just because young people are spending less on certain items doesn’t mean they’re saving more — even though 20-somethings are just as likely as older people to report a preference for saving over spending, according to Gallup.

In fact, nearly half of millennials are saving 5% or less of their income, while only 16% are saving more than 10%.


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