Millennials seem like the most commonly criticized and/or celebrated generation, in part because they happen to be emerging as adults at the peak of the information age. There have been countless articles blaming millennials for being tech-obsessed and self-entitled, and countless more defending the generation from these stereotypes.
However, not all stereotypes about the generation are untrue.
Like in any generational shift, there are distinguishing features that set millennials apart. Millennials waste money — like every other generation does. The question is, how are they wasting money differently than their forebears?
These are some of the most common ways millennials waste their money:
1. Live events
Millennials tend to prefer experiences over ownership, which isn’t necessarily a bad thing.
Spending money on experiences, rather than tangible items, gives you better memories and teaches you more lessons. But when it comes to building wealth and living financially responsible, focusing exclusively on experiences can be problematic. Experiences are temporary, whereas tangible objects tend to be semi-permanent.
Buying a home, for example, helps you build equity, and gives you an asset that will likely appreciate in value over several years. Renting, which millennials prefer, builds no equity whatsoever.
Spending too much money on things like concerts and special events, too, can quickly drain your entertainment budget.
2. Fast food
Millennials are the “grab and go” generation, with 29% of millennials claiming to purchase food “on the go” very often — compared to 19% of the broader population.
Rather than buying inexpensive groceries and cooking their own meals, millennials have no problem stopping at a local fast food restaurant, or even a gas station, for some quick, ready-to-eat food. Establishments like these charge a premium for the extra time and effort necessary to provide food this way.
3. Expedited delivery
The millennial generation gets a bad reputation for being both impulsive and impatient, and in some ways, the stereotype turns out to be true. One 2015 study found that 30% of millennials view same-day delivery as important — that compares to 19% for Gen X shoppers, 13% of baby boomers and 5% of seniors.
In some cases, this may be necessary—for example, if you need a book for a college course or a replacement part for your vehicle, next-day shipping may be well worth the cost. However, most of the time, planning ahead and waiting a few extra days for your shipment can save you significant money.
In a self-reported survey, millennials described their most common money wasters as going out to eat and losing expired food — both of which can fall under the “food” category above.
The next most common money waster was drinking alcohol, with over 27% of millennials claiming to spend too much money here (compared to 22% of Gen Xers and 13% of baby boomers).
This may be related to millennials’ tendency to invest in experiences rather than tangible goods, as alcohol is an exhaustible resource, and usually leads to a (temporarily) good time.
5. Investing conservatively
There’s no harm in investing conservatively. A well-balanced portfolio of different investment assets, over the course of a few decades, can still leave you well-equipped to retire comfortably.
However, millennials are altogether avoiding the stock market—only one in three is currently investing in stocks.
The stock market historically has been one of the best and most reliable ways to build wealth, so ignoring that opportunity could be quite costly. Millennials are also young, and younger people — regardless of their generation — have the luxury of investing more aggressively. Since they have more time to recover from potential downturns, it’s wise for them to make riskier investments while they have the chance.
The irony here is that millennial investors believe that they’re saving themselves money — after witnessing the economic recession of 2008, they’re wary of potential fluctuations in the stock market, and would rather not take the gamble.
Learn to Cut Back
If you’re in the millennial generation, this list should help you understand some of the ways you and/or your peers are wasting money. No one has a perfect financial record, and of course, you’re allowed to occasionally indulge yourself.
But the better control you have over your financial habits, the better future you can create for yourself.