4 Types of Spending Keeping Millennials From Getting Richer

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Millennials are a generation grappling with economic challenges that make wealth-building tougher than it was for previous generations. Despite earning more than their parents at the same age, many millennials are finding it hard to get ahead financially and part of the reason is where their money is going.

Below are four purchases that may be keeping millennials from building wealth.

Car Payments

According to Ashley Morgan, debt and bankruptcy lawyer and owner of Ashley F. Morgan Law, P.C., one major expense that has hurt her clients’ ability to gain wealth is high car payments. “Most people need a car and it is understandable to want a reliable car with good safety features,” she said. “However, car payments have gotten out of control. I regularly see car payments of $800 to $1,000.”

If you want to boost your budget and savings rate, Morgan suggested getting cars with monthly payments that are no more than $500. “Putting the money saved from getting a cheaper car toward retirement or a long-term goal can make a huge difference in your bottom line. Also, a cheaper car usually means lower insurance and fewer taxes,” she said.

Eating Out

Food delivery apps like Uber Eats and DoorDash have made it easier than ever to order meals without leaving your couch. According to data by YouGov, an online research and data analytics firm, delivery apps are most popular with the younger generations, with nearly 40% of Gen Z and millennials ordering from them at least once per week.

But that convenience comes at a steep cost. After paying the delivery fees and tips, you could be paying almost double what you’d pay for home-cooked meals or groceries. 

“There is nothing wrong with ordering food every now and then, but every day, multiple times a day becomes excessive,” Morgan said. “If you are not saving money each month, especially for retirement, Morgan suggests cutting back on food delivery to start putting some money away.”

Aspirational Spending

Millennials are often drawn to spending that feels productive, like gym memberships, wellness apps, pricey supplements and monthly subscription boxes. The idea is that spending money will kickstart a healthier, more organized or more successful version of themselves.

But according to financial coach Judy Ta, host of “Munchies and Money Moves,” those purchases often don’t lead to lasting change.

“I see people sign up for gym memberships or coaching programs hoping it’ll spark motivation,” Ta said. “But it often turns into guilt when they don’t use it.” So instead of committing to expensive subscriptions or memberships immediately, she suggests trying a short-term pass or trial first to see if you can actually follow through. 

Over-Gifting or Covering For Others 

Another type of spending that Ta believes is keeping millennials from getting richer is being too generous. For example, always picking up the tab, buying lavish gifts or covering travel costs for friends and family, even when their own budget is tight. Ta explained that this emotional spending is often driven by a desire to support loved ones or avoid being seen as “broke.”

Helping people is a beautiful thing. But if you’re regularly sacrificing your financial security to show up for others, it may be time to set boundaries and rethink how you show love and support. 

How To Shift From Spending To Saving

One of the hardest parts of saving is that the rewards aren’t always immediate. Delayed gratification isn’t as fun as a new outfit or a night out, but it pays off in the long run.

“It’s easy to focus on what you want in the moment,” Morgan said. “But if you break big goals into smaller wins, it gets easier.”

So instead of only saving for abstract goals like retirement or a rainy day, set milestones like building your first $1,000 emergency fund, hitting $5,000 in retirement savings or paying off a credit card. These smaller victories can help you stay motivated and consistent.

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