NEW YORK — You can’t judge a generation’s spending proclivities by its wallet.
That’s the bottom line in new research on today’s tweens, teens and young adults, a group spending 13 percent more this year than they did in 2002, even as they have less money to burn — and claim they’ve grown less materialistic, less enamored of prestige brands and more concerned about reducing stress and simplifying their lives.
Those attitudes are being formed by the 16- to 24-year-old segment of the Millennial generation, which comprises people ages eight through 26, the Yankelovich Monitor Minute related in a Nov. 17 report. It’s a set of priorities that suggests the best way for marketers to reach those teens and young adults is to reflect their growing self-awareness, rather than via marketing messages telegraphing coolness, Yankelovich advised.
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Despite their shifting priorities, a majority of the Millennials — those ages eight through 21 — are spending at an annual rate of $175 billion, up from $155 billion last year, a Harris Interactive YouthPulse study fielded this summer has found. That acceleration has come despite a 9 percent decline in the income available this year to those 57 million youths and young adults, which Harris projected at $211 billion, versus $231 billion in 2002.
The group’s increased rate of spending this year, said John Geraci, vice president of youth research at Harris Interactive, indicates, “It is a very optimistic generation and they demonstrate a great deal of confidence that good times are ahead for them.” That perspective stands in sharp contrast to that of Americans overall, only 35 percent of whom feel good about the economy, a sharp drop from 64 percent in 1998, according to an October Harris Poll.
It also shows a willingness to forgo savings in order to increase spending, Geraci noted. Currently, the cohort of eight- through 21-year-olds is saving at a rate of $36 billion a year, or 18.5 percent of their collective income. Though that savings rate pales against the 81.5 percent of the income they spend, it’s still substantially higher than the 3.3 percent share of income saved by Americans, on average, in the nine months ended this September, based on data from Columbus, Ohio-based consultant Retail Forward. Significantly, Americans ages eight through 21 put about 62 percent of their annual funds into savings at some point and, on average, keep less than $30 in their wallet, which means they frequently need to connect with their source of income to buy things — perhaps an incentive for specialty stores targeting teens and young adults to add ATMs.
Naturally, as children grow up they derive less income from their parents, but it’s curious how steep that curve has become: Children under age 13 obtain 87 percent of their funds from their parents, a figure that plummets to just 37 percent of the money in teens’ coffers and 7 percent of young adults’ finances, according to the Harris data.
Not surprisingly, as more of the country’s 16- to 24-year-olds have entered the workplace, the group has taken a more realistic view of its finances. With approximately 66 percent of that demographic having joined the work force, up from 42 percent in 1999, nearly the same share, or 62 percent, expressed concern over making ends meet, up from 42 percent four years ago. Too, there’s been a decline in the cohort who believe they will become rich — 59 percent versus 70 percent, Yankelovich found.
With more Millennials working, Yankelovich discovered, 77 percent of those ages 16 through 24 are looking for ways to simplify their lives, compared with 68 percent in 1999, and 76 percent said they need to find ways to reduce stress, up from 66 percent. In addition, 80 percent of that demographic feels a need to know themselves better, up from 71 percent four years ago; there’s been a sharp decline in their desire to buy brands that make them feel like they’ve made it — to 43 percent from 60 percent — and half said being rich is overrated, up from one-third in 1999 and perhaps reflecting a psychological compensation, as nearly two-thirds were concerned about making ends meet.