Know Your Spending Habits: A Millennial’s Guide to BudgetingOctober 5, 2020
Sticking to a budget can be tough. It’s even harder, however, when you don’t know where you tend to overspend. For several reasons, Millennials’ purchase decision process is different from previous generations’. For our latest blog post, we’ve compiled a guide to Millennial budgeting to help you better understand your generation’s spending habits and to help you uncover new patterns in your own spending.
Who are the Millennials?
Millennials, or Generation Y, are the world’s largest generation, made up of more than 83 million individuals. The Millennial generation is known for being open-minded and highly connected, having grown up with technology. Unlike Generation Z, however, who have lived their whole lives with smart technology, most Millennials can recall growing up with dial-up internet and VHS players, as well as the popularization of mobile phones.
Having grown up in a world with constantly changing technology, Millennials are known for being multi-taskers who value readily available information. When it comes to budgeting, 34% of millennials report using an app to track their spending and savings goals.
Millennial Purchase Decisions and Spending Habits
What Impacts Millennial Purchase Decisions?
Generation Y has experienced several financial events that shape the way they spend and save. The generation grew up during the 2007 recession, so most younger Millennials remember seeing their parents’ spending habits change. Older Millennials remember graduating high school or college during the recession. Job scarcity resulting from the financial crisis resulted in more student debt and less financial flexibility for Millennials than for previous generations.
The changing world Millennials grew up in differentiates their purchase decisions from previous generations’. They value brand transparency and social responsibility, and they trend toward private labels like Target’s “Smartly” label versus more expensive name-brand products.
Additionally, technology plays a large role in shopping for Generation Y. In 2019, Millennials made about 60% of their purchases online. They also tend to purchase from brands with stronger social media accounts. 47% of Millennials say their purchase decisions are largely impacted by social media.
Where do Millennials Spend Their Money?
All generations have unique saving and spending habits. Here are a few areas where Millennials stand out in their spending:
Food Away From Home
One of the most notable spending categories that sets Millennials apart is their affinity for food away from home. With many restaurants offering delivery and takeout options, Generation Y enjoys easy access to restaurant food. In 2018, the U.S. Department of Labor reported Millennials spent 47% of their food budgets dining out.
Generation Y loves to travel. In 2018, Berkshire Hathaway reported Millennials spent 42% more than their Baby Boomer predecessors on travel. The generation’s trend away from high-price brand names also means travel startups like Airbnb have boomed.
Millennials have more student debt than any preceding generation, averaging $29,000 in student loan debt per person. This means a large portion of many millennials’ budgets is attributed to student debt repayment.
For some individuals, student loan refinancing may be an option to help alleviate the student debt burden. To see what you could save by refinancing with ELFI, try our Student Loan Refinance Calculator.*
Millennial Budgeting Strategies
Knowing your generation’s spending habits can help you discover your own patterns. For example, by learning that many Millennials spend a significant percentage of their budgets on food outside the home, you may decide to track your own food spending for the same pattern.
Digital Budget Management
If you’re familiar with technology, budgeting apps are a great option for keeping your finances in check. Apps like Mint and Personal Capital are designed to help track your spending and saving. Some banks even offer budget tracking tools through their online or mobile banking platforms.
Digital budgets are a great option for individuals who prefer a more hands-off approach to budget management. With budgeting apps, your purchases can be automatically categorized to see where you’re saving or could use a little improvement. Once you have an idea of your strengths and weaknesses, you can outline a plan for sticking to your monthly budget.
Manual Budget Management
If you prefer to keep a closer eye on your budget, you may choose to track your spending manually. To do this, you can use a spreadsheet to keep up with what you’ve spent and saved. Some people also use the envelope system as a tangible way to track spending each month.
Refinancing Your Student Loans with ELFI
Regardless of the budgeting method you choose, one way to save on expenses each month is to refinance your student loans. ELFI’s 4.9-star Trustpilot rating and helpful Personal Loan Advisors make student loan refinancing easy and seamless.
With ELFI, you’ll never pay application, origination or prepayment fees, so you can focus all your payments on eliminating your student debt. For more information about effectively paying down student debt, check out our Torch Student Debt E-Book.
*Subject to credit approval. Terms and conditions apply.
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