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Millennial Money: How Millennials Spend Money

Millennial Money: How Millennials Spend Money

Jul 6, 2020

We are going to let you in on a secret: millennials spend money differently than their parents. Actually, this isn’t really much of a secret. It’s a well-known fact that the spending habits of millennials differ from that of baby boomers. (In case you’re wondering, you’re a millennial if you were born between 1982 and 1996).

In this article, we’re going to look at how millennials spend money. We’ll also look at how they’re different from previous generations along with tips in regards to the current COVID-19 situation and RESP savings tips.

How Millennials Spend

You’ve probably heard it before, but millennials prefer experiences over material things. While other generations like baby boomers and gen Z would much rather spend their money on clothing, furniture and electronics, millennials would rather spend their money on experiences like concerts, dinners out and travel.

You’ve probably heard it before, but millennials prefer experiences over material things. While other generations like baby boomers and gen Z would much rather spend their money on clothing, furniture and electronics, millennials would rather spend their money on experiences like concerts, dinners out and travel.

It’s this attitude that has helped fuel the rise in popularity of the sharing economy. While millennials do still value homeownership, it’s not as important as it once was with previous generations.

How Millennials are Different

It’s not just spending money where millennials differ. Millennials are earning a living in different ways than previous generations.

Whereas baby boomers would generally try to stay with one employer throughout their career, millennials are more likely to switch employers several times throughout their career. In fact, millennials can expect to work as many as eight jobs throughout their career.

This has earned millennials the nickname “job hoppers”, although this may not be by choice. Generally speaking, jobs aren’t as stable as they once were. Many millennials have been laid off at least once in their career, sometimes multiple times.

The lack of stable employment has forced many millennials to rely on the “gig economy” as a way to earn a living. This means that many millennials are making money through short-term contracts and freelance work. Because of this, some millennials are putting the dream of homeownership on hold until their career situation is more stable.

Tips for the Current Situation

Few could have foreseen the current economic situation that we’re in. The Coronavirus has reshaped our lives both from a health and economy standpoint. But there is a silver lining to it. The lockdown means that we’re spending a lot less money on discretionary expenses.

As millennials, this is a once in a lifetime opportunity to save your money. If you still have your job, use this as an opportunity to turbocharge your savings by saving all of the money that you used to spend on dinners out, travel, commuting or daycare for your children. Although you may still have your job right now, who knows what the future will hold. At least by saving your money, you’ll have emergency money waiting for when you need it most.

Your top priority should be saving an emergency fund if you don’t already have one. Financial experts recommend a rainy day fund with at least three to six months’ living expenses. You can set it up so that the money you used to spend on fun activities goes towards your emergency savings account.

Once you have a sizable emergency fund, you can focus on other financial goals like saving for retirement and your child’s RESP. Set a goal in terms of how much money you can afford to put towards each of them.

Let’s say you have $400 per month in extra cash flow since you’re spending a lot less these days due to COVID-19. You could choose to put $200 per month towards your RRSP and $200 per month towards your child’s RESP.

Although the Coronavirus is definitely not something to make light of, by having a savings game plan, you can help come out in better financial shape on the other side.

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