Woman paying for purchase with credit card.

Millennials’ Financial Habits: A Breakdown Of Characteristics, Priorities And Purchase Decisions

Hanna Kielar11-minute read
December 16, 2021

Millennials have received plenty of press, and why not? Their shopping habits have changed the way retailers operate, forcing many to embrace online storefronts. Their desire to own homes is now providing a boost to the housing market, and their struggles with student loan debt have encouraged politicians to debate ways to lessen the cost of a college education.

But are millennials that much different from baby boomers and the members of Generation X? They might be when it comes to their political beliefs and attitudes about work, but when it comes to saving and spending money, they’re not as different as you might believe.

Here’s a look at the occasionally complicated relationship millennials have with money, debt and savings. You might be surprised at how similar these young adults are to their baby boomer and Gen X forebears.

Millennial Characteristics

Before looking at the money habits of millennials, it’s important to look at what characteristics millennials have as they start to get older, compared to previous generations.

They’re Getting Older

It’s important to understand who the millennials are. Pew Research Center describes anyone born from 1981 through 1996 as millennials. This means that the oldest millennials are turning 40 in 2021. In addition, anyone born from 1997 onward is considered Generation Z.

They're Well-Educated

According to Pew Research Center, millennials are better educated than prior generations:

  • 39% of millennials from the ages of 25 to 37 have a bachelor’s degree or higher.
  • About 25% of baby boomers had at least a bachelor’s degree when they were 25 to 37, while 29% of Gen Xers had earned bachelor’s degrees or higher at the same age.

They’re More Likely To Live In Their Parents Homes

Maybe it’s high housing costs, their tendency to marry later in life or the college debt they face, but millennials are living in their parents’ homes longer:

  • Pew Research Center found that in 2018, 15% of millennials from the ages of 25 to 37 were living in their parents’ homes.
  • When baby boomers were 25 to 37, only 8% of them lived in their parents’ homes.
  • Only 9% of Gen Xers lived in their parents’ homes when they were 25 to 37.

They Have Different Attitudes About Parenting

Google/Ipsos Connect research found some interesting facts about how millennials parent:

  • 82% of millennial dads who watch videos on YouTube do so to connect with their children.
  • 75% of millennial parents say they have continued to pursue their passions after having children.
  • A poll by TIME and SurveyMonkey found that only 19% of millennial parents have never shared a photo of their children on social media.
  • Pew Research Center found that 57% of millennial moms say they are doing a very good job parenting. That’s higher than the 48% of Gen X moms and 41% of baby boomer moms who said the same thing when they were the same age.

They Like Cities

Pew Research Center says that millennials are more likely to live in metropolitan areas than previous generations:

  • 88% of millennials live in metropolitan areas today.
  • 84% of Gen Xers lived in metropolitan areas when they were young.
  • 68% of baby boomers lived in metropolitan areas when they were young.

Millennial Priorities

When it comes to millennials and their priorities, they’re a bit different when compared to other generations. Let’s take a look at what millennials are prioritizing these days.

They’re Not As Interested In Getting Married At A Young Age

In its research on millennials, Goldman Sachs reported that these young adults tend to get married at an older age than even the generation immediately preceding them:

  • In 2012, just 23% of millennials from the ages of 18 to 31 were married and living in their own households.
  • Compare that with 1981. Back then, 43% of adults from 18 to 31 were married.
  • In 1968, 56% of these adults were married and living in their own household.

They’re Focused On Health And Wellness

Researchers have discovered that millennials are more focused on staying healthy than previous generations were:

  • org found that 69% of young adults in 1998 disapproved of people who smoked one or more packs of cigarettes a day. In 2013, that figure rose to 83%.
  • The same website also found that 69% of young adults in 1998 disapproved of people who had one or two alcoholic drinks nearly every day. In 2013, 72% of young adults felt the same way.
  • In a 2013 survey, Aetna discovered that millennials were more likely to consider eating healthy and exercising as important factors in being healthy. According to Aetna, 22% of millennials counted regular exercise as part of their definition of being healthy. Only 14% of Gen Xers and 12% of baby boomers said the same thing.
  • The results were similar regarding diet. 24% of millennials said eating right was an important component of being healthy. 14% of Gen Xers and 12% of baby boomers said the same thing.

Millennials And Money

Millennials have a complicated relationship with money, but they do a better job of saving money than many of their baby boomer and Gen X counterparts. They also tend to earn more money than older Americans did at the same age.

What is the financial struggle facing millennials? Many of them are burdened by high amounts of student loan debt. This debt can cloud the financial prospects of even the hardest-working and hardest-saving millennial.

Millennial Saving Habits

The 2020 Better Money Habits Millennial Report is an interesting one. It shows that millennials are far better at saving their pennies than most critics think. According to Bank of America’s report, millennial saving habits are just as good, or even better, than those of former generations:

  • According to Bank of America, 73% of millennials are actively saving.
  • Bank of America reported that 59% of millennials have $15,000 or more in savings and 24% have $100,000 or more.
  • The report also found that the top savings priorities for millennials include building an emergency fund (reported by 51% of respondents), retirement (reported by 75% of respondents) and buying a house (reported by 32% of respondents).

Average Millennial Salary

Millennials might wish they made more money. According to Census data, though, millennials are earning more each year than the majority of older Americans did at the same age:

  • Analyzing numbers from the U.S. Census Bureau, Pew Research Center found that the median adjusted income in a household led by a millennial stood at $69,000 in 2017. That figure outranks nearly every other year as the highest median income for adults from the ages of 22 to 37.
  • Thanks to the longer time they’ve spent in the workforce, baby boomers have unsurprisingly tended to have higher household incomes, earning a median figure of $77,600 in 2017.
  • Gen Xers tend to earn the most. Pew Research Center said that the typical income of a household headed by a member of Generation X stood at $85,800 in 2017.

Millennials And Debt

One area in which millennials are struggling is with debt. Millennials, thanks largely to the soaring cost of a college education and an overreliance on credit cards, are burdened with more debt than Gen Xers and baby boomers were at the same age.

Just how much does debt weigh on millennials? Here are some statistics:

  • In 2019, millennials in the United States had racked up more than $1 trillion of debt, according to research from the Federal Reserve Bank of New York.
  • The Federal Reserve Bank of New York also reported that the amount of debt carried by millennials has increased by more than 22% in the last 5 years, more than any other generation has ever faced.
  • This debt might be keeping many millennials from buying a home. According to the Federal Reserve Bank of New York, the homeownership rate for young adults from the ages of 24 – 32 fell by about 9 percentage points from 2005 – 2014. In January of 2019, Federal Reserve Bank of New York released a report estimating that 20% of this dip can be blamed on student loan debt.
  • Credit card debt, too, is having a negative impact on millennials. According to Northwestern Mutual's 2018 Planning & Progress Study, millennials from the ages of 25 to 34 are burdened with an average of $42,000 in debt.
  • According to the same study, credit card debt made up a quarter of the average amount of debt owed by older millennials. Student loan debt accounted for about 16% of what older millennials owed.
  • Millennials have more debt than other generations. According to Northwestern Mutual’s findings, the average U.S. adult has about $38,000 in debt. That’s a lot, but it’s less than what the average millennial owes.

Average Credit Scores Of Millennials

Another area in which millennials are struggling is their credit.

In 2019, Experian™ reported that millennials have an average FICO® credit score of 665. That's not a terrible score, but it is lower than the national average FICO® score of 701. Experian™ said that members of the Silent Generation, those in their 70s and older, had the highest average FICO® Score, 756. Baby boomers came in second with an average score of 732.

Credit scores are important. Lenders use them to determine who qualifies for mortgages, auto loans, student loans and personal loans. They also rely on credit scores when assigning interest rates to borrowers. Those with lower credit scores will typically be stuck with higher interest rates on the money they borrow.

Fortunately, it’s not impossible for millennials – or the members of any generation – to boost their credit scores. A good way to start is by checking your credit report and analyzing it for credit weaknesses and possible errors.

Millennial Spending Habits

There are a lot of millennials, and these young adults spend a significant amount of money. But what influences their shopping decisions? What inspires millennials to dip into their bank accounts? Let’s take a look at what the research has to say.

They Like Smartphones

According to a 2019 report from marketing firm Adglow, smartphones and other mobile devices play a big role in millennials’ purchase decisions:

  • 25% of millennials spend more than 5 hours on their smartphones every day. Not surprisingly, millennials make up 58% of mobile shoppers. They are also two-and-a-half times more likely to be influenced by a mobile app.
  • Adglow also reported that 47% of millennials say that their purchase decisions are influenced by social media.
  • The same report said that 16% of millennial smartphone owners make online purchases with their devices multiple times every week.
  • 43% of millennials have liked more than 43 brands on Facebook, Adglow says, while 63% use social media to stay up to date on brands.
  • Perhaps most importantly for retailers, Adglow found that 44% of millennials say they are willing to promote brands on their social networks.

They’re Into Saving Money

In 2018, marketing firm Herosmyth published an in-depth look at what millennials look for when making purchasing decisions. A big factor? They want to save money:

  • Herosmyth said that 66% of millennials say they would switch brands if they were offered a discount of at least 30%.
  • The company said that 72% of millennials search for a discount before purchasing items online.
  • 52% of millennials search for a discount before making purchases in brick-and-mortar stores.
  • When shopping online, millennials spend an average of 3 minutes searching for discounts before they pull the trigger on purchases.
  • Herosmyth said that millennials want the companies from which they buy to do good, too. The company wrote that 75% of millennials consider it fairly or very important that brands give back to society instead of just earning profits.
  • Millennials don't mind shopping at thrift or resale stores for clothing. Herosmyth wrote that 30% of millennials say they shop at such secondhand stores at least once a year. Another 21% said they will continue to shop at such stores in the future.
  • However, this doesn't mean that millennials won't spend big on certain items. Herosmyth wrote that 60% of millennials spend more than $4 on a cup of coffee and that 70% will spend more to eat at “hipper” restaurants. The company reported that more than 50% of millennials spend money on taxi and Uber rides, while only 29% of Gen Xers and 15% of baby boomers do the same.

Millennials’ Buying Habits

It’s not surprising that retailers are constantly courting millennials. This is a big generation, after all, and they have money to spend. But where are millennials spending their money?

It might surprise you, but millennials aren’t averse to shopping at physical stores. Yes, they like to shop online, but they also shop at brick-and-mortar retailers.

Here are some key facts about where all those millennial dollars are going:

  • They shop at retailers who make them feel special. Financial services firm Accenture reported that 95% of millennials say they want brands to court them. They especially like it when brands send them coupons through email or snail mail. This has the greatest influence on where they shop.
  • They like shopping in physical stores. According to Accenture, 82% of millennials prefer buying in brick-and-mortar stores. Accenture says that 91% of millennials prefer shopping in drugstores, while 68% prefer shopping in consumer electronics stores. Accenture says that 84% of millennials prefer shopping in department stores, while 83% favor discount and mass merchant retailers.
  • They buy from retailers who offer the best products. Marketing blog Invesp said that eight out of 10 millennials never buy a product without first reading a review of it.
  • They don't want to chat so much with salespeople. Invesp said that 53% of millennials prefer to research the details of products online instead of talking to employees at a physical store.
  • They prefer retailers who will text them or participate in online chats. Invesp found that 61% of millennials said that they find it easier to chat online with retailers or communicate with them through text or messaging apps instead of visiting a physical location to talk with in-store employees.
  • They like shopping with retailers who offer online coupons. Invesp found that 12% of millennials always use coupons when shopping online. An additional 21% said they use coupons very often, while 19% said they use them often. Only 16% said they never use them.

Online Shopping Habits

Ecommerce and online shopping continue to disrupt the retail world, and millennials, not surprisingly, are at the center of this.

Here’s some statistics about millennials and online shopping:

  • They make more purchases online than they do in physical stores. A 2019 study by CouponFollow, a provider of online coupons, found that millennials in 2019 make 60% of their purchases online. That’s a hefty jump from 2017, when millennials made 47% of their purchases online. CouponFollow also reported that millennials make 40% of their purchases in physical stores. That’s down from 53% in 2017.
  • Mobile devices play an important role in millennials’ online shopping habits. CouponFollow reported in 2019 that millennials make 36% of their total purchases using mobile devices. Again, that’s up significantly from 2017 when millennials only made 24% of their purchases with their phones.
  • Millennials aren’t as likely to use desktop or laptop computers to shop online. Nielsen found that only 49% of millennials report using a desktop or laptop for such purchases. That is compared to 56% of Gen Xers and 72% of baby boomers.
  • They’re still influenced by family and friends. Sure, millennials like to shop online, but that doesn't mean they’re not interested in the opinions of family members and friends. Nielsen found that 55% of millennials said they seek the advice of family members when making purchases. A total of 54% said they rely on the advice of friends.
  • Millennial women are especially eager for sales. A 2019 survey of millennial women by Thinkover, a digital shopping website, found that 89% watch items to see if they will go on sale before they buy them. 55% of respondents said they continuously check websites for sales. The survey found that 58% monitor their email for sale alerts.

The Bottom Line: Millennials Spend And Save Differently

What’s all this mean? This only means that millennials are different from previous generations in how they spend, save and live. Those differences, though, can be surprising. Despite negative media portrayals of millennials, the numbers show that they are just as hard-working, thrifty and focused on the future as their older peers when they were the same age. Check out how Millennials Are Changing The Face Of Adulthood for more information on millennials and how they’re facing the future.

Hanna Kielar

Hanna Kielar is a Section Editor for Rocket Auto℠, RocketHQ℠, and Rocket Loans® with a focus on personal finance, automotive, and personal loans. She has a B.A. in Professional Writing from Michigan State University.