Younger Consumers Spend Less on the Big Stuff, But Owe More
Millennials tend to garner a lot of attention because they are different. They just don’t do things as older consumers did for so long. From their mid-20s through their mid-30s, this age group lends itself to many studies and leaves many of us scratching our heads. After all, is it worth it to sleep on your parents’ couch for years so that you can drink expensive coffee? That couch might be comfortable, but the coffee must be really good!
While just 37 percent of millennials up to the age of 34 own homes, 45 percent of baby boomers were indebted to mortgage lenders at that age—and it was expected. This does not mean, however, that millennials aren’t spending money on housing, it’s just that more of it is spent on rent, with a whopping $93,000 given to landlords by the time they are 30 years old. Studies also show that most millennials who do buy homes are regretful. This all lends more clarity to the decline in home ownership among the younger generations, mainly those born between 1981 and 1996.
Millennials have interesting habits—so much though that they have developed a stereotype. While they typically eschew homeownership and the purchasing of new cars—and sometimes even driving at all—they are known to be bigger spenders, and this is where that famous cup of gourmet coffee comes into play. Most millennials also say that they would rather eat out, and that they will spring for more expensive luxuries such as that Uber ride. The bottom line though, literally, is that they owe more, and they are not necessarily buying the larger-ticket items. Only time will tell how this plays out in the future as decades pass, however, for now higher debt means more delinquencies, a greater rate of collections lawsuits—and default judgments too. Along with much of the other conventional modes in lifestyle that millennials are not used to dealing with, legal action may come as a jarring surprise as well in the form of wage garnishments, and bank and property levies.
Student loan payments pay a large role in the finances of millennials too as the average borrower for their age pays over $350 a month to student loan servicers. This type of financial burden, while the idea is for it to be a positive investment in education, can make it difficult for younger graduates (and non-graduates too, who are still responsible for their debts) to get their lives going and to move ahead with hitting some of the milestones like getting married, starting a family, a business, and more.
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