53 Revealing Millennial Spending Habits in 2021

Millennial spending habits influence the global economy and have a macro impact on the way businesses operate. As the first generation to grow up with technology at their fingertips, and influenced by the rising cost of a college education, millennials face a unique set of challenges that have changed the way they save, spend, and invest. Instead of beginning marriage conversations and starting families, these technologically savvy individuals have focused their efforts on saving money and paying off their loans. 

So how have millennial consumers’ shopping patterns changed during a global disruption? The lasting impacts are still uncertain but will likely have a permanent effect on the future of brand consumption.

Millennial Spending Habits Overview:

• Millennials spend an average of $47,256 per person, annually.
• During COVID-19, millennial men working from home spent more on online shopping than millennial women.
• 65 percent of millennials improved their personal finances during the lockdown. 
• 83 percent of millennials want the brands they purchase from to align with their beliefs and values.

Table of Contents:

• The State of Millennial Consumers
• Millennial Spending Power
• Millennial Online Shopping Habits
• Millennial Consumer Behavior
• How to Advertise to Millennials

Who Are Millennial Consumers?

Millennials, also called gen Y, were born between 1981 and 1997 and are typically driven by value, quality, or image when making purchases. The average millennial income is between $64,000 to $75,000, and the size of the millennial generation is larger than any other age group, with more than 75 million individuals.  

1. Millennials are made up of people born between 1981 and 1997. (Pew Research Center)
2. The largest share of the U.S. population, 22 percent, is made up of millennials. (The Brookings Institution)
3. The size of the millennial generation is expected to peak in 2036 at 81 million people. (McKinsey & Company)
4. U.S. millennial households are the most ethnically diverse and hold the most college degrees of any other generation. (The Nielsen Company)

Millennial Spending Power

The spending power of millennials has proven to be a driving force in the economy, as they start families later than previous generations and focus on experiences versus goods, paying off loans, and saving for retirement. 

5. Millennials are expected to spend $1.4 trillion in 2020. (5W 2020 Consumer Culture Report)
6. On average, millennials make between $64,000 to $75,000 annually. (United States Government Accountability Office)
7. Millennials spend an average of $47,256 per person, annually. (U.S. Bureau of Labor Statistics)
8. Millennial spending power will increase as their income reaches an estimated $8.3 trillion by 2025. (McKinsey & Company)
9. Millennial women are more likely than women in any other generation to consider investing their money. (Accenture Millennials & Money)

Millennial Buying Power 

It seems that millennials get a bad wrap for spending all their discretionary money on tiny apartments in crowded cities and food that could have been made at home, but the reality is that even though many will still splurge on their pets, the demographic has been frugal and saved what they could throughout their lifetime.

10. 75 percent of millennials state they can pay all their bills, including credit card bills, each month. (The Deloitte Global Millennial Survey 2020)
11. In 2020, millennials made up the largest share of home buyers compared to any other generation. (2020 NAR Home Buyer and Seller Generational Trends)

Millennial's Online Shopping Habits

Gen Y grew up with tech, so it’s no surprise millennial spending habits tend to be with online transactions. The difference is, in past years, millennial consumers would go into a retail store and try the product out before finding and purchasing it at a cheaper price online. In the wake of COVID-19, this practice of “showrooming” is no more. 

12. Millennials are over twice as likely to use mobile wallets and payment apps than older customers, 64 percent and 31 percent, respectively. (J.D. Power Australia Banking Industry Insight)
13. An estimated 86 percent of millennials are considered digital buyers. (eMarketer)

Online Shopping Before COVID-19

Pre-Coronavirus, online shopping was already booming for millennials. With the availability of Amazon one-day deliveries and groceries delivered to your doorstep, millennials have gotten used to a world where anything is available with a push of a button. 

14. In 2019, millennials made 60 percent of purchases online. (CouponFollow)
15. Nearly 70 percent of millennials disagreed with personal data collection practices in 2019. (Internet Innovation Alliance Consumer Data Privacy Concerns)
16. About 65 percent of millennials consider the opinions of their family and friends when making purchases. (Millennial Marketing)

Online Shopping After COVID-19

Millennial spending habits online have only been exacerbated by COVID-19 straining supply chains and inundating postal workers with packages. While the overall majority of millennial consumers reduced their spending on non-essential items, most of those purchases happened online during the pandemic. 

17. 52 percent of millennials say they now prefer shopping for groceries online than in-store. (Consumer Trends 2021)
18. Millennial men working from home have spent more on online shopping than millennial women. (Money Under 30)
19. 39 percent of millennials reduced spending on non-essential items during COVID-19. (Global Web Index)
20. Millennials tend to make impulsive purchases, 82 percent reporting purchasing an item the first time they see it. (5W 2020 Consumer Culture Report)
21. Since the start of COVID-19, 30 percent of millennial consumers increased their online spending. (Clutch)
22. 47 percent of millennials reported shopping on Amazon once per week in May 2020. (Jungle Scout) 

Millennial Consumer Behavior

Like other generations, millennials share similar characteristics that provide a similar digital stamp as their peers. The real question is, “What do millennials spend their money on?”

23. 50 percent of millennials report they have either stopped purchasing or reduced their purchases of fast fashion. (The Deloitte Global Millennial Survey 2020)
24. Gen X and baby boomers spend one-third more on entertainment purchases than millennials. (U.S. Bureau of Labor Statistics)
25. Millennials favor ethical consumption over price when purchasing goods and services. (Journal of Marketing Analytics)
26. Millennials in the U.S. are four times more likely than baby boomers to avoid buying products from big box food companies. (McKinsey Perspectives on Retail and Consumer Goods)

Consumer Behavior Before COVID-19

Millennials integrated technology into their everyday purchases prior to the lockdown, and have always had a keen sense of value and societal impacts with their purchases.

27. Millennials spent $57 on average, more than any other generation, during a single shopping trip. (The Nielsen Company)
28. Over half of millennials used their phones to research products and services while shopping. (Millennial Marketing)
29. 53 percent of millennials reported spending more money in order to save time pre-pandemic. (Valassis Coupon Intelligence Report)
30. The majority of millennials spent full price on fast-moving consumer goods. (The Nielsen Company)
31. In 2019, 60 percent of millennials agreed they made an effort to shop at local stores. (Valassis Coupon Intelligence Report)

Consumer Behavior After COVID-19

While mass layoffs and unpaid temporary leave were common across the world, millennials found themselves avoiding overdraft fees by saving money and picking up hobbies like cooking while stay-at-home orders were in place. 

32. One-third of millennials reported their income was unaffected by the pandemic. (The Deloitte Global Millennial Survey 2020)
33. While millennials report spending 60 percent less overall during the first two months of the COVID-19 pandemic, they’ve spent more money on grocery, alcohol, restaurant, and health and beauty purchases than pre-pandemic levels. (Clutch)
34. 38 percent of millennials in the U.S. and U.K. have increased their gaming usage since the start of the outbreak. (Global Web Index)
35. Half of millennials state they order take out one to two times per week. (Clutch)
36. 31 percent of millennial shoppers are using mobile payments more often than before the pandemic. (J.D. Power Australia Banking Industry Insight)
37. 65 percent of millennials have improved their personal finances during the lockdown. (Money Under 30)
38. Millennials state they’re willing to patronize small, local, sellers over large retailers after the pandemic. (The Deloitte Global Millennial Survey 2020)

Millennials Saving Money

The majority of millennials are more financially literate than other generations and have made strides to improve their personal financial situation by reducing their spending and focusing on debt payments as the lockdown began. The problems of high student loan debt and unaffordable housing still persist, though, and many still feel unconfident about the future of their financial stability and feel an overwhelming distrust of banks.

39. Nearly three-fourths of millennials wonder how their friends afford the experiences they post on social media. (2019 Modern Wealth Survey)
40. 57 percent of millennials don’t trust financial advisors and think their primary goal is to make money for the company and themselves. (Accenture Millennials & Money)
41. Over a quarter of millennials reduced their monthly spending in 2020. (Better Money Habits Millennial Report) 
42. Millennials are the most likely demographic to hold savings or investments. (Global Web Index)
43. 75 percent of millennials who are saving are setting money aside for retirement. (Better Money Habits Millennial Report)
44. Over three-quarters of millennials have some type of debt. (Better Money Habits Millennial Report)

Millennial Spending Habits and Marketing

Millennial consumer behavior has been driven primarily by the societal changes they’ve faced in their lives.

Products millennials love are often ones that offer the most value, quality, and image enhancement. In 2020, gen Y felt the closest brand intimacy with the following companies:

45. 60 percent of millennials state that they’re willing to purchase from large businesses that took care of their workforce and had a positive societal impact during the pandemic. (The Deloitte Global Millennial Survey 2020)
46. Millennials are the most likely demographic to pay for access rather than ownership of a product or service. (Global Web Index)
47. 58 percent of millennials state that they learn about new brands through video-based social media at least once per month. (McKinsey Perspectives on Retail and Consumer Goods)
48. 29 percent of millennials purchase brands they’ve seen advertised on social media. (Global Web Index)
49. Over 60 percent of millennials say they would donate their loyalty points from a brand to a good cause instead of using them personally. (KPMG)
50. Nearly half of millennials (47 percent) educate themselves on the environmental implications of the brands they consume. (The Deloitte Global Millennial Survey 2020)
51. Millennials in the U.S. are six times more likely than baby boomers to find newer brands better and more innovative. (McKinsey Perspectives on Retail and Consumer Goods)
52. 48 percent of millennials report free delivery would convince them to make a purchase. (Global Web Index)
53. 83 percent of millennials want the brands they purchase to align with their beliefs and values. (5W 2020 Consumer Culture Report)

What Makes a Millennial Spend More?

Millennials were the first generation to popularize purchases that make positive societal impacts, and they’ll often shell out more cash for purchases that fill that requirement. Social media plays a big role in how millennials will gauge the corporate social responsibility of a brand, and it’s clear that doing proper research and influencing their own network of peers plays a big role in their purchases. 

Millennials want value, quality, and a positive perceived image in the products and services they purchase. Make the following considerations when advertising to your millennial audience:

• Highlight Environmental Impact: Highlight the positive societal aspects of your product or service in your marketing efforts. From fair wages to eco-friendly production, millennials want to share the same beliefs as the brands they purchase. 
• Create an Easy Return Policy: Be clear and concise when writing your return policy and make it easy to access on your website. 
• Vary Your Marketing Formats: Create varied marketing formats through video or blog posts with top- and middle-funnel content instead of bottom-funnel transactional content around your product or industry.
• Use a Subscription-Based Business Model: Millennials want to pay for experiences without the responsibility of ownership. By leveraging millennial spending habits in the sharing economy through a subscription-based model, you can capture a wider net of millennial consumers. 
• Offer Free Delivery: Estimate the cost of local shipping for a product and feature the savings of free shipping for the consumer on the product page. Be clear about delivery and processing times within your policy.

As millennials pay off their loans and focus on saving, they’ve put a pause on using their cash to start families and their purchase behavior has therefore adapted to fit their lifestyle. Millennial spending habits are a driving force behind the economy, and in order to keep up, brands must satisfy these technologically savvy, eco-conscious, and price-sensitive consumers differently than generations past. 

Sources: MarketWatch