The New Rules of Money: What Millennials Actually Spend On

Curious about how young adults manage their money today? The financial landscape has changed dramatically, and with it, the priorities of a generation. We’ll explore the key shifts in Millennial spending, revealing what they value and why their approach to finances looks so different from what came before.

The Great Shift: Experiences Over Possessions

One of the most defining characteristics of Millennial spending is the strong preference for experiences over material goods. While previous generations may have prioritized purchasing a new car or fine china, many young adults would rather spend their disposable income on creating memories. This shift is not just a whim; it’s a reflection of changing values and economic realities.

This “experience economy” includes a wide range of spending:

  • Travel: From weekend getaways to international backpacking trips, travel is a top priority. Instead of saving for a down payment on a house, many Millennials prioritize saving for a trip to see the world.
  • Dining and Socializing: Going out to restaurants, trying new craft breweries, and attending food festivals are seen as valuable social experiences worth paying for.
  • Live Events: Concerts, music festivals like Coachella or Lollapalooza, and sporting events are major spending categories. The temporary, shareable nature of these events holds more appeal than a permanent object.
  • Skill-Building: Workshops for pottery, cooking classes, or language courses are also considered valuable experiences, as they contribute to personal growth.

This focus on living a full life often means delaying traditional milestones. The desire for flexibility and memory-making frequently outweighs the appeal of being tied down by large physical assets.

Priority 1: The Weight of Debt

It’s impossible to understand Millennial spending without addressing the significant burden of debt many face. This generation entered the workforce during a period of economic uncertainty and rising education costs, which has fundamentally shaped their financial behavior.

The primary source of this debt is student loans. With the average student loan debt for a borrower in the tens of thousands of dollars, a large portion of their monthly income is immediately allocated to repayments. This has a ripple effect on all other financial decisions. Money that might have gone toward a down payment on a home or into a retirement account for a Baby Boomer is instead used to pay down educational debt. This isn’t a choice but a financial necessity that dictates where their money goes first.

Priority 2: Embracing the Subscription Economy

Millennials grew up with the internet and are digital natives, which has made them comfortable with a new way of consuming goods and services: subscriptions. Rather than large, one-time purchases, they often prefer smaller, recurring payments for access to a wide array of products and entertainment.

This trend covers nearly every aspect of life:

  • Entertainment: Streaming services are non-negotiable for most. This includes video platforms like Netflix, Hulu, and Disney+, as well as music services like Spotify and Apple Music.
  • Meal Kits and Groceries: Services like HelloFresh, Blue Apron, and Imperfect Foods offer convenience and novelty, turning a daily chore into a curated experience.
  • Software and Apps: From productivity tools to fitness and meditation apps like Calm or Headspace, subscriptions are the standard model.
  • Curated Boxes: Subscription boxes for everything from beauty products (Ipsy) to clothing (Stitch Fix) and coffee provide a personalized and convenient shopping experience.

These small monthly charges can add up, but for many, the convenience and access they provide are well worth the cost.

Priority 3: Investing in Wellness and Self-Care

Health and wellness are a top priority for young adults, and their spending reflects this. This goes far beyond basic healthcare. It’s a holistic approach to physical and mental well-being that has become a major spending category.

Spending in this area includes:

  • Fitness: Gym memberships, from budget-friendly chains like Planet Fitness to high-end boutique studios for yoga, cycling, or CrossFit, are common expenses. At-home fitness equipment and subscriptions like Peloton also saw a massive surge.
  • Mental Health: There is a much greater willingness to spend on mental well-being. This includes therapy, either in-person or through apps like BetterHelp, and mindfulness apps.
  • Healthy Eating: There is a clear preference for high-quality, organic, and natural foods. Millennials are often willing to pay a premium for groceries that they perceive as healthier and more ethically sourced.
  • Athleisure: Brands like Lululemon, Nike, and Athleta have thrived as comfortable, functional clothing that doubles for workouts and everyday life has become a wardrobe staple.

Priority 4: Conscious Consumerism

More than any generation before them, Millennials and Gen Z want to know where their products come from. They often make purchasing decisions based on a company’s values, ethics, and environmental impact. This has led to the rise of “conscious consumerism.”

Many young adults are willing to spend more on a product if it comes from a brand that aligns with their personal values. This can mean:

  • Supporting Sustainable Brands: Companies known for their environmental commitment, like Patagonia, are extremely popular.
  • Choosing Ethical Production: Brands that ensure fair labor practices and transparent supply chains gain loyalty.
  • Buying Local: Supporting small, local businesses over large multinational corporations is a common priority.
  • Secondhand Shopping: Thrifting and using platforms like ThredUp or Poshmark is popular for both its affordability and its positive environmental impact.

For this group, a purchase is not just a transaction; it’s a statement about the kind of world they want to live in.