We've been told that millennials don't care about owning things, so it makes sense to think that they might spend less. The latest Consumer Expenditure Survey, which records how Americans spend their income, casts doubt on that assumption. Not only are typical millennials buying a lot, but they're spending their income at a higher average rate than adults between 35 and 44 years of age.
Eat, pray, love, and spend money
Let's take a look first at the survey's next-older cohort, adults between 35 and 44 years of age. In 2014, they reported an average pre-tax income of $84,094 in 2014. (Since the survey is national, it makes taxes impossible to parse, but it's good to keep in mind that these are all averages.) This older group spent an average of $62,512 per year, which is about 74 percent of their pre-tax income.
Next, let's compare that with younger adults between 25 and 34 years of age. This younger group's income averaged $61,042 a year. They spent about $49,546 that same year, or 81 percent of their income. So this group reported spending 7 percent more of total income than the older group, even though they reported an average of $21,000 less income before taxes.
It's really easy to miss the fact that younger adults are spending a larger portion of their income by only reviewing dollar amounts on individual items. Here are some individual examples that might suggest millennials spend less of their income simply because they make less. For example, millennials spend the most on the big three costs everyone has: shelter, transportation, and food. But they spent less on the big three, on average, than the older cohort:
|Food at home||$3,711||
|Food away from home||$2,920||$3,387|
A rough analysis of the thousands of survey items recorded suggests that at least 60 percent of the time, younger adults reported spending less on individual items. Here are four additional examples where they spent less than the older group on individual things:
|Cell phone service||$1,048||$1,250|
Numbers can "lie" to use if we take them out of context. In this case, we find that while millennials made and spent less in dollar amounts, they spent 81 percent of their income, while Gen-Xers spent closer to 74 percent, on average. So unless their spending habits change as they advance in their careers and income, today's 25- to 34-year-olds might end up being bigger consumers than they'd like to admit.