READING 1 Millennials and Money

Millennials AND Money

Read the following article. Pay special attention to the words in bold. 14.1

You’ve probably been hearing a lot about millennials these days. What, exactly, is a millennial? A millennial is a person born between 1981 and 1996. This is the largest group of Americans, 78 million. Within the next two years, millennials will make up 50 percent of the workforce1. By 2030, they will be the majority of the workforce at 75 percent and the largest group of consumers, so marketers are especially interested in this group and their spending habits.

Millennials’ attitudes towards money and spending are different from those of their parents, the “Baby Boomers” (born between 1946 and 1964), or “Generation Xers,” (born between 1965 and 1980). First, they often shop online, where they can compare prices, products, and vendors. They are more influenced by the opinions of other consumers than by the recommendations of family and friends. Second, they prefer to rent things rather than own them; they prefer movie and music subscriptions rather than ownership of DVDs or CDs. They get their music and movies on their smartphones, tablets, or computers. A significant number of them don’t even own a television. Third, they like to spend their money on life experiences, such as entertainment, restaurants, and travel rather than on goods. They often have the attitude of “YOLO”: You Only Live Once. They want to experience all life has to offer. Generally, they are optimistic2 about the future.

What influences these attitudes? At the end of 2007, the United States went into a deep economic recession3 . The average salary for a person just out of college in 2013 was $34,500. This was the lowest starting salary for a college graduate since 1998. And recent college graduates have been entering the job market with huge college debt4. As a result, millennials have learned to be careful with money. They are getting married later than previous generations, and many don’t believe in spending a lot of money on an expensive wedding. They often use public transportation and bicycles for short trips or use car-sharing services. They prefer to rent an apartment rather than buy a house because they don’t want large financial commitments.

American millennials spend $600 billion dollars a year. Marketers need to understand the mentality and habits of millennnials if they wish to attract their dollars.

1 workforce: all workers employed in a specific area 2 optimistic: believing that good things will happen 3 recession: a time when economic activity is not strong 4 debt: an amount of money owed

Percent of Annual Spending on Major Categories

by Millennials, Gen Xers, & Baby Boomers

Food at home

7.2 7.1 7.2

Food away from home

Housing

6.3 5.8 5.1

32.7 31.5 35.7

Clothing

3.7 3.2 2.7

Transportation

16.8 16.1 15.9

Healthcare

5.6 6.5

9.4

Entertainment

4.9 5.8 5.4

Data source: Bureau of Labor Statistics

Marketers need to do more research on millennial spending habits. Despite differences in values, these three generations have some similar spending habits.