Cash is Not King for Millennials
Rather, they value experiences for the healthiest life of all
Sixty-three percent of millennials don’t have a single credit card. And they would rather take a job that pays less if it means living a healthier lifestyle.
As the “entitled generation” focuses on experiences over possessions, people are starting to take notice of the spending trends — retailers especially.
When Lextant, a design research firm in Columbus, Ohio, conducted a year’s worth of of interviews with millennials, the firm found that key values drive those born after 1980 and determine their spending strategies.
Millennials seek to feel “extraordinary,” noted Chris Rockwell, president of Lextant. With their values rooted in accomplishments, self-development, involvement, meaning and independence, they seek to experience life and use that to grow and better themselves.
This is the generation whose parents, boomers and Gen-Xers, sought affluence through accumulation. Millennials felt the absence of overworking parents in their lives and felt the presence of "things." They also saw an economy go south, saw home mortgage and job crises play out, and watched their parents struggle with a lack of balance, too much stress and the health issues that resulted.
They are vowing to do things differently.
Chad Daniels of Princeton, New Jersey, born in 1985, is co-founder of a personal development blog, buildthefire.com. He says millennials abhor debt, spend less on things, and weigh their money choices in terms of their values.
"Happiness is not derived from spending money," Daniels told LifeZette. "It's derived from the people you share your life with, and you don't need too much money to live that way. It's been a good while since I looked at my car, a paid-off 2010 Hyundai Tucson, and thought, ‘This thing is amazing’ or had it warm my soul."
Lextant’s "Millennial Project" research showed that 20-to-30-year-olds "want to experience everything life has to offer first-hand, gaining knowledge and experience to truly develop their own, authentic perspective."
Millennials believe experiences are key to that perspective, in more than one way.
First, experiences help them develop into unique human beings. Seventy-five percent of millennials list travel as their number-one financial priority, for example, according to Jenna Rogers, a certified financial planner and client advisor with Mission Wealth, a wealth management firm in Santa Barbara, California.
"Rarely does purchasing a home or investing make the top five on their financial priority list," she added. "Many would sacrifice home ownership in order to travel and prefer to have jobs that give them this freedom."
And an experience, like travel, a concert, or gathering with friends or family pays off according to Rogers in four ways: (1) in the planning/anticipation phase, (2) while experiencing it, (3) through memories, and (4) the growth or meaning developed from the experience, which never goes away.
"These experiences are shaping them as people and ultimately influencing their futures selves," Rogers explains.
Second, experiences build meaning and connection with important people, both family, friends and the new people they meet.
Kristy De Leon, of Global Millennial Coaching, notes her clients "are more likely to invest in experiences that will create an intense emotional experience for their children."
Chad Daniels agrees that experiences create bonding. Recently he took his mother, sister and girlfriend to Ireland, and cites a surprise 30th birthday party thrown by his girlfriend as a key peak experience in his life. Although it’s easy to argue that the joy of experiences may fade over time, Daniels believes the emotional impact makes them last.
"These experiences remind me how lucky I am to have these people in my life," he explained. "And they reaffirm that I am living the type of life I want to be living."
"Everyone from retailers to travel agents are fretting about the consequences of this trend," Howard Dvorkin, chairman of debt.com, told LifeZette. "I’m very happy about this as a CPA and financial counselor. One big cause of personal debt is 'keeping up with the Joneses,' which traditionally means new cars and big houses, requiring big loans. Thankfully, few of us take out loans to go bungee jumping or buy concert tickets. That means experiences cost less than things. Even expensive experiences like vacations are self-contained — your work gives you only so much time off to take them."
With a large student loan load, many millennials are foregoing additional debt, too. A Bankrate commissioned study found that 63 percent of millennials don’t have a single credit card.
Kristen Steele, 30, director of marketing and publisher relations at bookmasters.com in Ashland, Ohio, boasts that she has a near-perfect credit score, an established career and very frugal spending behavior.
"I don’t need to go on a crazy expensive vacation to make memories and enjoy my family time," she said. "The carousel park is 30 minutes from our house and costs $2-3 per ride. Our daughter loves carousels and horses right now, and we’re being mindful of what makes her happy by planning our experiences based on those things. Making every moment special, even in a small way, is what’s most important to us."
Pat Barone, CPCC, BCC, MCC is a professional credentialed coach and author of the Own Every Bite! bodycentric re-education program for mindful and intuitive eating.