Depending on who you ask, millennials are having the toughest time with the current economy. If you’re fresh out of college, there aren’t a whole lot of prospects for you professionally and if you’re relatively new to the work force, chances are the only person who thinks you’re balling so hard they have to find you is Sallie Mae. That being said, the buying power—and the actual purchases—of this generation do not reflect the financial situation they’re in.
According to a February report from American Express Business Insights:
Millennials actually increased their spending on premium luxury fashion by 33 percent from 2010 to 2011.
This was a bigger jump than any other demographic. With marriage rates being what they are, we know young people weren’t buying wedding rings, but they were spending on jewelry of some sort. According to the report, these consumers led the way on jewelry spending, with an increase of 27 percent in 2011. Overall, boomers are still the biggest buyers of luxury goods and services at 50 percent, and though millennials only spend about 3 percent on these items, their purchasing patterns suggest that could change dramatically.
The good thing is millennials aren’t necessarily spending recklessly. Thanks to flash sales and services like Groupon and other daily deal sites, young people can actually afford the good life on a budget. They’re also more likely to trade one luxury thing for another, so if you spend on an expensive handbag or a Brazilian blowout, then you know you have to cook for the rest of the week or swap fine dining for fast food. On the flip side, there is a decent proportion of this generation that still favors credit cards and splurges on non-essentials without thinking about the long-term consequences, which will appear sooner than they think.
It’s no surprise, a large chunk of millennial money is spent on technology—particularly smart phones and any new gadget Mac throws their way, but travel is also becoming one of the biggest areas they don’t mind dropping cash on. In 2010, young consumers became the fastest growing users travel services, hotels have responded to the generation’s technological needs by offering amenities like complementary high-speed Internet and iPads in every room—which is another luxury tradeoff.
This generation has gotten a bad rep for spending frivolously but it sounds like millennials know how to strike the right balance. If you’ve got no money in the bank, then you shouldn’t be purchasing anything but if you know how to stretch a dollar so that you can get the finer things in life at a lower price, while still handling your business financially, you’re in a pretty good place. It wouldn’t hurt to save even more for a rainy day in this economy though.