May 14, 2024
The year 1989 was a big one. Tom Petty declared he wouldn’t back down, the Berlin Wall came down and the first commercial internet service providers popped up.
It was also a year where 25-to-34-year-olds were spending an average of $62,992 per year, if you adjust for 2022 inflation, according to a report in Business Insider.
Advertisement
The publication looked at Consumer Expenditure Surveys from the Bureau of Labor Statistics from 1989 and 2022 to compare spending habits now and then. Business Insider wanted to see how much of a disparity there was between baby boomer spending in the late 80s, when they were 25 to 34, compared to the current age cohort in 2022.
It turns out that the two groups spend around the same amount, when you adjust for inflation. Business Insider discovered that millennials in 2022 spent an average amount of $67,883 per year — about $5,000 more than their 1989 peers.
Young people often complain that life was much easier for their parents and grandparents. Though 2022 is definitely more expensive than 1989, the difference in spending habits between the two appears to have a lot more to do with changing generational attitudes rather than rising prices.
Carpets are out, soy milk is in
What’s clear from the Business Insider analysis is that trends have a huge impact on spending.
For instance, in 1989, wall-to-wall carpeting still dominated the home decorating trends. The 25-to-34-year-olds of the time spent an average of $139 a year on floor coverings.
But in 2022, minimalist fashion reigns and bare floors are what the younger generations want. Which means they only spend an average of $24 on floor coverings.
Another big fad can be seen in food consumption. Millennials currently spend 55% less on fresh milk and cream and 29% less on alcohol than their 1989 counterparts.
The plant-based movement likely plays a part in the decreased spending on dairy items. Younger consumers see non-dairy alternatives as better for the environment (though some argue they may be worse), increased food sensitivities and good marketing, according to a 2024 University of North Carolina paper.
Advertisement
The decrease in alcohol consumption, on the other hand, may be less a reflection of actual food consumption and more a reflection on attitudes about health. Gen Z is slightly younger than millennials, but 36% of them are going sober for their mental health, according to a recent survey from marketing company, NCSolutions.
Drinking also can be costly. You can save over $1,000 a year by abstaining from it — another reason that NCSolutions says that young people are staying away from booze.
Must Read
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and the simple steps to fix it ASAP
- Robert Kiyosaki begs investors not to miss this ‘explosion’ — says this 1 asset will surge 400% in a year
- Vanguard reveals what could be coming for U.S. stocks, and it’s raising alarm bells for retirees. Here’s why and how to protect yourself
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
Homes, honors and health care
The largest expenses that are pushing millennials to spend more than boomers are health care, education and rented housing.
Millennials spend 81.6% more on education and 59.5% on rented dwellings than boomers would have in 1989 — but that should come as no surprise. Stories chronicling the high amounts of student loan debt young people carry or the increasingly expensive rental crisis are a dime a dozen these days.
But the 207.8% increase in health insurance spending is a notable change. Health care spending in general has skyrocketed in the intervening three decades. Private insurance costs and health care expenses have gone up, but younger generations may also be investing more in their wellness, whether that be through therapy or personal training.
The 80s were a time when fitness really started to take off — think Jane Fonda’s aerobics and jazzercise. In the past 40 years, the “wellness industry” has grown substantially and is now worth $5.6 trillion, according to the Global Wellness Institute’s 2023 assessment.
And many young people are obsessed with their wellness journeys. McKinsey says that Gen Z in particular is more attuned to their health and fitness than other generations, due to exposure on TikTok to skincare routines, exercise regimes and mental health talk.
This awareness of health can generally be seen as a good thing, but it does add up. People spend an average of $722 per year on their appearance, according to a 2022 study from Advanced Dermatology. A gym membership can go up to $40,000 a year if you want one that will maybe help you live longer, according to the New York Time. Psychology Today says that one therapy session can cost between $100 and $200 a session — and isn’t always covered by insurance.
You May Also Like
- Turning 50 with $0 saved for retirement? Most people don’t realize they’re actually just entering their prime earning decade. Here are 6 ways to catch up fast
- This 20-year-old lotto winner refused $1M in cash and chose $1,000/week for life. Now she’s getting slammed for it. Which option would you pick?
- Warren Buffett used these 8 repeatable money rules to turn $9,800 into a $150B fortune. Start using them today to get rich (and stay rich)
- Here are 5 easy ways to own multiple properties like Bezos and Beyoncé. You can start with $10 (and no, you don’t have to manage a single thing)
Sabina Wex is a writer and podcast producer in Toronto. Her work has appeared in Business Insider, Fast Company, CBC and more.
