Living with credit, Rewards, Shopping

4 reasons millennials deserve more credit for how they handle money

Kelly Dilworth

Back off, naysaying baby boomers. Millennials are better money managers than they get credit for – even if they do drop more cash than most on bar tabs and overpriced toast.

Today’s 20- and early 30-somethings are more likely than older generations to splurge on small-dollar luxuries, such as restaurant meals and bar tabs. For example, a June 2017 Bankrate survey found that more than half of millennials in their early to mid-20s dine out at least three times a week. A similar number head to a bar at least once a week.

Additional research, though, shows millennials are also more likely to embrace healthy financial habits that could pay off handsomely in the future – even with their frequent splurges on craft beer and frappuccinos. Here are just four ways millennials handle money better than older generations, despite being dealt a worse financial hand.

1. They ignore meaningless labels.
Millennials don’t shop the way their older siblings and parents did, and that’s making retailers nervous.

Numerous studies have found that millennials aren’t swayed by high-end brands, so they don’t feel the need to pay top dollar just so they can flaunt a label or brag about the luxury goods they can afford.

Older generations, by contrast, tended to be much more status conscious and, as a result, non-millennials could be more easily manipulated by high-end brands.

As my colleague, Brady Porche, recently wrote in his blog post, “Millennial dining trends eschew traditional ‘VIP’ card experiences,” even premium credit card issuers, such as American Express, are feeling the heat as millennials eschew status-based luxury in favor of more valuable rewards.

Instead, millennials are more interested in saving money and collecting one-of-a-kind experiences they can purchase with rewards. For example, Porche wrote, “Chase’s Sapphire Reserve card was a hit with millennials because its major selling point is its rich rewards bonus, not customer service perks such as travel agents and concierges.”

2. They prioritize experiences over things.
Rather than crowd their homes with stuff, millennials are also more interested in spending their money on experiences – a preference researchers say could lead to more happiness over time.

For example, happiness researchers Elizabeth Dunn and Michael Norton found that experiential purchases tend to be more satisfying, in part because they give people a chance to anticipate and relive their experiences and share them with other people.

“We remember experiences and we look back at pictures and we reminisce and we get happy all over again,” Norton said in a 2013 interview with “We very rarely reminisce about the moment we bought our TV.”

3. They save more for emergencies.
Despite earning less money, on average, millennials are also more likely to stash money away for a rainy day.

According to a June 2017 study by Bankrate, millennials are outperforming older generations by setting aside more of their money for emergencies.

For example, the study found that half of all millennials have saved up at least three to six months’ worth of living expenses, but only 49 percent of baby boomers have done the same – despite typically earning larger incomes.

Meanwhile, at least 27 percent of baby boomers are living paycheck to paycheck without any extra funds to tap. A smaller percentage of millennials – just 25 percent – said the same.

Millennials’ healthier savings habits may be due in part to their personal experiences living through the most recent recession. Many graduated into a deeply damaged job market and have also had to deal with stagnant wages, skyrocketing housing costs and substantial college tuition increases.

Rather than be cowed by these financial setbacks, millennials are fighting back by working harder to be prepared for unforeseen emergencies.

4. They eschew high-interest debt.
Millennials are also less likely to max out credit cards and take on a bunch of high-interest debt. A 2016 study from Experian, for example, found that millennials tend to own fewer credit cards than members of Generation X and the baby boomer generation.

Millennials also hold less debt overall and carry smaller card balances.

Pluses and minuses: Millennials deserve more credit than they get for healthy financial habits, but their best financial virtues could also turn into albatrosses if they aren’t careful.

For example, if a credit-skeptic millennial avoids borrowing altogether, they could risk creating a healthy credit score and have to pay more to borrow in the future.

Millennials who choose bargains over brands could also wind up busting their budgets if they get too addicted to scoring deals.

Similarly, millennials’ yen for unique experiences could also lead to overspending – especially if they don’t take frequent breaks from collecting memories and Instagramming their best moments.

See related: Millennials reap latest perks in credit card rewards wars, What millennials can teach us about credit, 7 smart money and credit tips from millennials

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