Brian Wallace — September 29, 2019 Millennials have come of age, and now make up a full third of the workforce. While Instagram FOMO might still have you wondering how they lead such posh lives, but don’t be fooled. The reality is, being a millennial is no cakewalk.
The fact is, 62 percent of millennials have to live paycheck to paycheck. That’s more than any other age demographic. Only 38 percent say they feel financially stable, fewer than any other age demographic. They carry an average debt load of $ 36,000, and 1 in 5 have reconciled themselves to the likelihood that they’ll carry their debt to the grave. Still, this generation gets a lot of press trying to peg them as irresponsible or less than hardworking.
The narrative of the irresponsible millennial spender doesn’t add up.
CNBC tries to nail millennials for spending $ 478 monthly on nonessentials like eating out. “It may seem odd that when we look at statistics that say so many millennials are living paycheck to paycheck, but on the other hand, they’re overspending,” says personal finance writer Farnoosh Torabi. “When your financial life is in disarray, chances are, you will overspend,” she told CNBC. “Emotions around money lead us to make irrational choices.”
But they’re not irrational choices. Boomers and rich people may be eager to blame financial insecurity on millennials, but scraping by from paycheck to paycheck under the stress of debt, and relying on stagnant incomes that can’t support record high housing costs, people need to find ways to enjoy life from time to time. Buying a sandwich or going to the movies with friends is hardly irresponsible. Unregulated rents creating a growing class of employed homeless people, however, might be.
Moreover, millennial nonessential spending is actually lower than the $ 483 average monthly nonessential spending across age demographics. So boomers and gen Xers shouldn’t be too quick to point the finger. Stanford research that shows millennials have it harder than their parents. Northwestern Mutual finds that millennials are “more likely than other generations to say they are ‘highly disciplined’ or ‘disciplined’ financial planners,” with 57 of them self-identifying this way, compared to fewer than half of gen Xers and boomers. So the popular “millenials are irresponsible spenders” narrative pushed by CNBC and others just doesn’t add up. Their spending also reveals the thoughtful way they spend.
Millennials are making careful purchase decisions to enhance their lives and ease their burdens
Millenial’s financial sensibility is evidenced by the popularity in their demographic of websites like Digital Trends, which guides users to make tech purchases that will get the most for their money and most directly serve their needs.
“What we’re seeing is that millennials of all income levels are approaching our content with the intent to buy, and the desire to make an informed, meaningful purchase decision,” says Ian Bell, cofounder and CEO of Digital Trends. “They’re spending, but not erratically. They want select products that will enhance their lives or make things easier for them.”
Digital Trends attracts over 30 million readers per month, most of them millennials, and many of them high-earning HENRY millennials. HENRYs are unique amongst millennials in that they enjoy a higher standard of living, with jobs providing six figure incomes. They’re less likely to be overstressed from debt, because they’re among the millennial minority not living paycheck to paycheck.
But even with extra income to burn, Bell says HENRYs are wary of frivolous spending, especially where physical products are concerned. “They generally prefer to spend their money on experiences over things. So the products they do buy have to serve a purpose, or create an appealing experience in their daily lives.”
Deloitte’s 2019 millennial survey finds that “optimism and trust are becoming scarce” as millennial skepticism towards businesses reaches new highs. Businesses are having to work overtime to reach them.
Companies have to work with, and market to, an increasingly skeptical population
“There’s no way to reach them without authenticity,” says Bell, “and there’s no way to fake authenticity.” He attributes part of Digital Trends’ success in reaching such a large millennial audience is their lack of pretense, which he says reflects a core commitment. “We write to the reader as a friend. We provide honest, three dimensional reviews. We always put the reader first.” It sounds so simple, one wonders why companies are doing marketing acrobatics trying to fake it.
Millennials aren’t the irresponsible upstarts depicted by popular media tropes. They’re intelligent, switched-on consumers who occupy the largest share of the workforce and are spending their paychecks thoughtfully as they raise the next generation. Any company that wants to employ, market to, or earn the respect of millennials needs to first understand where they’re coming from, and the complex financial pressures governing their adult lives.
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