Millennials Making More Happen With Less by Jeff Desjardins, Visual Capitalist
Recent survey sheds light on millennial spending habits
The Chart of the Week is a weekly Visual Capitalist feature on Fridays.
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Despite the Western world’s general shift towards healthier eating, it may surprise you to learn that McDonald’s shares traded at all-time highs just days ago.
How is this possible?
Part of the reason is that although millennials will tell you otherwise, the name of the game for courting many millennials is still convenience. Price points at a restaurant such as McDonald’s still have wide appeal to a cash-strapped generation.
Based on a recent survey by TD Bank, the convenience trend is still on track. Here’s what we learned on millennial spending habits from the results.
Getting More out of Less
A major finding of the survey was that although millennials “go out” twice as often as Generation X and three times as often as Baby Boomers, they spend less per month on purchases than their older cohorts.
Millennials made more purchases on retail goods and dining than other generations, but spent less money overall. In fact, the only category where Millennials spent more than Gen X and Boomers is on coffee and fast food – demonstrating a need for food on the run and frequent doses of caffeine.
The average millennial went out 13 times each month, spending $103 for an average of $7.90 per transaction. This compares with nine trips with $122 of spend ($17 per transaction) for the average consumer.
The same was the case for grabbing “coffee and food on-the-go”, where millennials said that they went on more trips than the average consumer. Millennials also spent a higher total than others, spending $80 over 11 trips (compared with $67 over eight for the average consumer).
Experiences vs. Material Items
While the survey paints a picture of millennial thriftiness, we also think that there is another lens that can be used to shed light on the results. In particular, we believe this shows that the value that millennials place on having experiences.
To many of the demographic, “going out” is as much about the experience as the material food itself. Whether it is connecting with old friends at a new thin-crust pizzeria or trying a locally-roasted single-origin coffee with a significant other, it’s often more about sharing an experience with good company. It doesn’t have to be a fancy dinner or involve a $100 bottle of wine purchase to count as quality time.
This could be a partial reason behind a higher frequency of trips out, even though less money gets spent overall.
Cash vs. Credit
A final point of interest from the survey lies in the difference in how the demographic make discretionary purchases.
On average, Americans spend $4,700 per year with a credit card, and $2,400 with cash, a debit card and checks for discretionary purchases. Millennials tend to use cash, a debit card and checks more often ($5,200) and charge 22% less ($3,300) than the average consumer
Millennials, many of whom grew up during the Financial Crisis, are more averse to debt. This is corroborated by the results of a different survey showing that seven out of 10 millennials say they would prefer to use a debit card, rather than a credit card, for their purchases.
It’s also an attitude that we’ve covered in a previous chart of the week, where we showed that only 37% of millennials were confident in managing their credit, while 70% of the demographic group hold their savings and investments in cash.