7 Things Millennials Are Overspending On
Written by
Cindy Lamothe
Edited by
Gary Dudak
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Every generation has their strengths and weaknesses when it comes to finances. For millennials, learning how to curb poor money habits can help them build wealth with time.
“Millennials often overspend on overlooked categories that seem harmless but can quietly erode financial health,” said Ali Zane, credit repair expert and CEO of Imax Credit.
With that in mind, here seven things millennials tend to overspend on. You can also check out several items they don’t waste money on here.
‘Invisible’ Digital Expenses
One key overspending category, according to Zane, is “invisible” digital expenses — think cloud storage, app subscriptions and premium features for software.
“Many don’t realize they’re being charged for these, as they auto-renew with little thought,” he said.
He added that cutting down on these unused subscriptions or consolidating services can free up significant money monthly.
Health and Wellness Trends
“Millennials are big on wellness but tend to overspend on boutique fitness classes, organic groceries, and health supplements,” said Zane.
While health is important, paying for high-end yoga or fitness memberships when lower-cost or free options exist (like YouTube workouts or meetups at local parks) can unnecessarily deplete your bank account.
Similarly, opting for less expensive but equally nutritious food options can cut grocery bills substantially.
Tech and Gadgets
Another area where millennials tend to overspend, according to Zane, is on the latest tech. New smartphones, tablets or smart home devices often have steep price tags.
“The allure of staying current is natural, but sticking to upgrading only when necessary and buying refurbished devices can help reduce these costs without sacrificing functionality,” he said.
Housing
According to Matt Schuberg, certified financial planner and founder of Planned, one of the most common areas where he sees millennials overspending on is on their rent.
“I think there’s been a shift in the last decade or so that has caused many people to focus on ‘living in the moment’ and not be as focused on saving for their future,” he said. “Enjoying life is important, but we should try to find a balance where we’re able to enjoy life while also putting away money for our financial goals. This involves not spending too much of our income on housing.”
Dining Out
Zane noted that dining out has become an almost daily occurrence for a lot of millennials, which can become quite pricey and lead to much overspending.
However, he said, “Eating out is an enjoyable experience, so I don’t recommend cutting it out completely.”
Instead, the goal would be to try to limit how often you eat out. “As a millennial myself, I like to plan out date nights with my wife once a week as a special night where we can enjoy ourselves without breaking our budget.”
Experiences
Millennials overspend on experiences, according to Melanie Musson, finance expert with Insurance Providers.
“They’ll take the opportunity to attend a ‘once-in-a-lifetime concert’ and spend whatever they need to so it can happen,” she said. “They’ll travel across the country, even if they can find tickets to a big star’s show. If the event was truly a once-in-a-lifetime affair, the spending would probably be OK.”
Unfortunately, she said there are usually several of these types of opportunities and people will spend thousands of dollars for a concert every year or two.
“You can reduce these costs by limiting a big expense experience to once every five or ten years, depending on how you can fit it into your budget,” she said.
Small Expenses That Add Up
Musson noted that millennials tend to overspend on small things, too.
“They grab a cup of coffee, a vitamin drink, an acai bowl or a croissant. Each purchase is minimal and seems like it won’t impact a budget. But a $7 drink one day and a $10 bowl the next adds up to hundreds of dollars a month.”
According to Musson, millennials can get into the mindset that life — buying a house, car, and other necessities — is so expensive that these minor purchases don’t even matter.
“They do matter, though, and the seemingly small things add up,” she said.
She added that millennials can reduce these costs by committing to a once-a-week treat and figuring out how to satisfy their cravings by making things at home.
“For example, it’s cheaper to buy an espresso machine that you use every day than to buy a handcrafted drink every day,” Musson said.
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