The millennial generation, the largest in U.S. history, encompasses those born from 1981 to 1996, and they distinctly differ from older generations—even when it comes to their finances.

Millennials are more racially diverse, more educated, and more internet savvy. This generation experienced 9/11, the 2008 market crash, and the COVID-19 pandemic. They have also experienced severe real estate and stock market fluctuations, and they carry large student loan debt balances.

Perhaps influenced by these experiences, their outlook and behaviors tend to differ greatly from the generations before them. Millennials, now 28 to 43 years old, tend to be more value-oriented than previous generations. Social issues like sustainability also impact their spending.

However, while their interests may differ from those of previous generations, they share many of the same concerns that older generations had regarding growing their careers and families. Here are ways that millennials’ experiences have shaped their spending and saving habits. 

Understanding Millennial Money Habits

Millennials have had uniquely difficult financial experiences. The 2008 financial crisis, which struck when they were in their teens to late 20s, hit them especially hard: A 2019 paper found that the average millennial lost about 13% of their earnings during the 2008 recession.

Research also reveals that the net worth of millennials born in the 1980s is 34% lower than expected due to economic recessions, evidence that world events have likely shaped this generation’s spending habits.

A 2022 retirement readiness survey from Goldman Sachs found that overall, millennials expect to retire during ages 60 to 64, but 34% of the generation feel they are behind with their savings.

Currently, the saving rate of millennials is 9.7%. Yet, 46% of millennials believe they will not be financially prepared for retirement when the time comes.

Debt Management

One reason why millennials are behind on saving for retirement is debt. They have a growing debt load—currently owing about $1 trillion.

Their debt crisis has been spurred by attending four-year universities and a lack of consistent education about loans and interest, which made it easy for many millennials to take on excessive student debt. The average millennial student loan borrower owes $32,800.

Author and financial educator is concerned that millennials considering college are not being adequately informed about long-term debt that has terms “that end up trapping people for 20 to 30 years after you take out the loan,” she says. “You’re just sort of rushing these 17- to 18-year-olds into some of the biggest and most serious, most long-term financial relationships that they’ll ever have.”

“The continued rise in credit card delinquency rates is broad-based across area income and region, but particularly pronounced among millennials and those with auto loans or student loans,” Donghoon Lee, an economic research advisor at the Federal Reserve Bank of New York, said in a press release.

Spending Habits

Despite millennials’ debt, they have a reputation for being high spenders and a stereotype of being indulgent and reckless with their finances. It has been more than a decade since Time Magazine published the notorious cover story, “Millennials: The Me Me Me Generation.”

Since then, those referenced teens and 20-somethings have entered a fundamentally different workforce, housing market, and financial ecosystem than any generation before them.

, a millennial founder of the financial education company Money & Mimosas, believes the stereotype is inaccurate. “The truth is that the cost of living has greatly outpaced the increase in earnings. Since 2000, the price of goods has increased 67%, while earnings have increased a total of 7%, or a mere 0.3% per year since 2000,” she says.

The amount of money it takes for millennials to get an education, buy a house, and own a car is significantly higher compared to their parents’ generation. For example, millennials are paying 100% more on average for homes than their parents’ generation, the baby boomers, did in the 1970s.

Millennials spend an average of $85 a day, accounting for 28% of all daily per-person consumer spending in the United States. This number is expected to climb as high as 35% over the next 15 years. Their top three spending categories are housing, healthcare, and personal insurance, much like the generations before them.

As the first generation raised on the internet, millennials lead the pack in online purchases. With both convenience and price in mind, this generation uses online shopping to broaden their options and turns to reviews and testimonials when making a purchase.

Many millennials focus on purchasing sustainable, cruelty-free, or vegan items instead of opting for the goods with the lowest price or absolute best rating. A 2020 study by the IBM Institute for Business Value found that 79% of millennials cite sustainability as important to them.

“I make a conscious effort to purchase products from brands and small businesses that align with my values. I also extend this practice to my investment choices,” says Doe.

Investing Behaviors

Millennials are paying off the past and saving for the future simultaneously. Sixty-four percent of millennials are invested, with the most favorable form being crypto, according to a 2022 Investopedia study.

In 2022, one in three millennials were invested in crypto, with the next most popular being stocks. The same Investopedia survey found that most millennial investors are confident: 65% said they are doing an “above average” job managing their portfolio.

Still, even amid their financial confidence, millennials express wariness toward taking risks. For example, the same Investopedia survey found that 37% of millennial investors would classify their portfolios as “lower-risk” investments.

Strategies for Saving and Investing More

“Setting and tracking financial goals can help you become more intentional, especially for millennials who are looking to take the next step for major, expensive life milestones like a wedding or purchasing their first home,” says , head of advice and planning at Wells Fargo.

When it comes to saving and investing, there are a few strategies to employ. As a rule of thumb, one should aspire to follow the 50/30/20 framework. This framework states that you should allot half of your paycheck for basic necessities like housing, utilities, monthly minimum payments, and groceries; 30% on things you want, such as clothing, subscriptions, gym memberships, etc.; and the final 20% into savings.

“Having money set aside for the unexpected provides both literal and psychological safety. If you don’t have money in an emergency fund, don’t worry—you can start with any amount of money,” Liersch says.

“For example, if you set aside $100 a month, in a few short months, you may have more than most Americans have saved for an emergency, which is an enormous accomplishment! And if you did it for the year, you’d have well over $1,000, which can give you peace of mind that the next flat tire, electrical problem in your house, lost phone, or whatever else it might be won’t set you back too far, financially speaking.”

Many are turning to high-yield savings accounts to offset the effects of inflation. These accounts function similarly to a standard savings account, but with significantly higher interest rates. Roth individual retirement accounts (Roth IRAs) are also a great option for longer-term saving for retirement.

For those offered a 401(k) package through their employer, they should aspire to maximize their contributions and utilize any employer matching. Automatic contributions are one way to ensure that part of your earnings are put into savings every paycheck, plus it’s saved pretax.

Impact of Money Habits on Millennials’ Future

Though life experiences and debt burdens have left many millennials stressed about the future, the 2022 Investopedia Financial Literacy Survey found them to be the most confident when it came to investing. “The point of becoming financially competent and financially empowered is to be able to move your money in the way that you want,” Anat says. “And that can be to lavish yourself and your loved ones with time and privilege and comfort. It could also be to use your money in ways that are important to you in terms of changing the world. That’s what really drives me is when to get my head above water to go beyond survival, beyond scarcity, and to be financially stable, but also financially free.”

The Bottom Line

Millennials’ lived experiences are different from those of the generations before them. Millennials’ money habits, whether saving or spending, are inextricably linked to the world around them. They may have a reputation for being reckless spenders, but in actuality, millennials are actively saving for emergencies and retirement.

That said, like many other generations, economic volatility has millennials worried about whether they are adequately prepared for the future.