Millennials are spending much less on cigarettes and alcohol, and more on education, health, and lifestyle, according a new report by AlphaBeta, How Millennials Manage Money.
The group whose oldest members are now approaching their late-30s, now represent almost half of the workforce and one third of total consumption in Australia.
The report commissioned by AfterPay, revealed that millennials are responding sensibly to greater financial pressures in the way they spend, use credit, and save.
Credit card use is dropping with the proportion of young people with a credit card falling from 58 per cent to 41 per cent in the last 14 years. Millennials are 37 per cent less likely to own a credit card than older Australians as they view them as being costly and risky.
They also only have about half the credit card debt of older Australians as a proportion of their income. Buy now, pay later has become one of the alternatives, with almost 70 per cent saying they use Afterpay in place of credit cards.
The report also revealed that they are better savers than their parents, with 36 per cent saying they save regularly compared to just 28 per cent of older Australians.
“Millennials face greater financial pressures than previous generations,” said Dr Andrew Charlton, co-owner of AlphaBeta.
“In response, Millennials are making different spending decisions to past generations and are actually spending more wisely – including cutting back on discretionary purchases, saving more, and using new technologies to help them budget effectively and spend differently.
“Millennials represent almost half the Australian workforce and spend one in every three dollars – their ability to make smart financial decisions shouldn’t be underestimated.”
The report used historical and new data to compare the financial pressures and spending habits of people now aged between 18 and 37, to those of that age in previous generations.