Millennials are part of a generation that has become recognized for their unique characteristics, especially in terms of their interests, preferences, and spending habits. Wealthy millennials may share many of the traits of their peers. However, affluent millennials see things a bit differently when it comes to money. If anything, their luxury spending behavior is more distinctive. According to the Pew Research Center, millennials are on the brink of surpassing Baby Boomers as the largest living adult generation. That gives them tremendous economic power. So, businesses wanting to capture a share of this market must pay attention to the following trends in millennial spending.
It may not be possible to predict exactly where millennial millionaires will direct their purchasing power in the new year. But, previous trends in millennial spending should give us clues about how affluent millennials may spend their money in 2020.
Here are some areas where we can see patterns or trends in millennial spending habits:
The first big trend in millennial spending is in tech. Having grown up with technology, millennials are very comfortable with it. They prefer managing their money online and they mostly shop on the net. Online flash sales, for example, have served as their entry point into luxury brands. Wealthy millennials also enjoy using social media to share their unique experiences, such as going to an exotic location on their private jet or yacht.
Millennials, in general, are more risk-averse with their investments, since they entered the workforce following the Great Recession. But, affluent millennials are more open to investing. They are apt to invest outside the U.S. They like investing in technology and their most popular stock investments are in tech companies. They’re also drawn to exciting or trendy investments, such as cryptocurrency. According to an Edelman report, 25% of millennials surveyed use or hold cryptocurrency and 31% are interested in it. Furthermore, 75% of them believe tech innovations like blockchain make the global financial system more secure.
Millennials also believe real estate is key to wealth creation. Based on our research, more than 90% of millennial millionaires are homeowners and they are more likely to be married. Most millennial millionaires live in California, followed by New York, Florida, Massachusetts, and Texas. But they prefer to live in places that are more affordable, like the suburbs or second-tier cities.
Affluent millennials may also choose nontraditional luxury neighborhoods over more prestigious ones. They prefer new construction, open floor plans, and want to be closer to “the action.” Home improvement? Younger millennials are typically not keen on big renovation projects. But, as they get older, wealthy millennials are gaining interest in larger homes in great locations, even if they need updating.
Health and wellness is another emerging trend in millennial spending. More than 60% of millennial millionaires say they are interested in health. So, they are spending more money on a healthy lifestyle. This includes spas and weeklong retreats. Many of them also like the idea of being able to walk to fitness centers and healthy dining options. So these preferences may influence real estate trends.
Millennials, in general, are less likely to be loyal to a single brand, compared to older generations. They’re also more socially minded. Based on our research, 70% of millennial millionaires say they are willing to spend more with brands that support causes they care about. Wealthy millennials will even seek them out. These trends in millennial spending may change the game for luxury brands and luxury industry professionals.
Another trend in millennial spending is focused on fashion. Wealthy millennials are creating new fashion trends and status symbols, according to Business Insider. While millennials may dress more casually, they like to buy pricier sneakers and streetwear. Young, tech CEOs like Facebook’s Mark Zuckerberg have helped popularize the look.
Many millennials are choosing rideshare services and public transit over owning cars. Interestingly, when they do buy, millennials prefer Sedans to SUVs. Besides vehicle cost, millennials want to account for rising gas prices and lack of available parking in many cities. These factors inform their purchases. But even millennial millionaires rank the BMW 3 Series as their top choice, followed by the Honda Accord and Jeep Grand Cherokee.
Similar to other millennials, affluent millennials favor experiences instead of things. This is especially reflective of where they choose to spend their money. They’re more willing to pay extra for VIP treatment and customization. This is so they can gain greater comfort or better service. Think special sections in clubs or luxury hotels that will enhance their experience.
Charitable giving is also a big trend in millennial spending. Millennials are also very generous donors. 35% of millennials report they have donated to charities, according to our Millennial Wealth Report. And, for millennial millionaires, about 56% donate. Affluent millennials want to use their wealth with purpose, to make a difference and improve the world.
Millennials are surpassing baby boomers as the largest, living adult population. They stand to inherit $60 billion in the great wealth transfer. Read our report, in collaboration with Coldwell Banker Global Luxury, to understand how you can reach them.
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