How Canadian Millennials Are Spending Their Money
Since the COVID-19 pandemic hit in late 2019 and early 2020, Canadians of all ages have been spending less money.
Research shows an increase in spending in Canada during the past decade, yet it has come to a halt as the economic repercussions of the pandemic continue to play out across the country and the world. That said, not everyone is spending (or not spending) their money in the same way. There are still some unique differences between the Canadian generations when it comes to spending, saving, and investing their money. Today, we’re going to take a closer look at millennials and their spending habits over one of the most tumultuous years in recent memory.
Millennials Are Still Making “Comfort” Purchases
Prior to the pandemic, the data showed that millennials spent more than all other generations on “comfort” purchases like clothing, streaming services, and going out to eat. For the most part, these spending habits have remained intact. However, due to COVID-19 restrictions, millennials are opting to get food delivered rather than eating at a restaurant. Though spending is down across the board, millennials are still making financial decisions that reflect their desire to enjoy their free time.
However, not all comfort purchases have stayed popular — or even possible — during the pandemic. Concerts and similarly crowded events have become more complicated with COVID-19 restrictions in place. Additionally, millennials have shown a greater aversion to travel than Generation X or baby boomers.
Millennials Rent More Than They Buy
Income inequality has become a hot button issue that often pits millennials against their parents’ and even grandparents’ generations. While living expenses have continued to rise over the last 30 years, especially in populous cities like Vancouver and Toronto, wages have stagnated. As a result, millennials simply do not have the capital saved to buy or even finance a home. Instead, they tend to rent apartments or houses — often with at least one roommate to cut down on expenses.
While living expenses have continued to rise over the last 30 years, especially in populous cities like Vancouver and Toronto, wages have stagnated.
In fact, many millennials don’t even have enough money to rent their own place. Though unemployment is steadily declining in Canada, the unemployment rate is still significantly higher than it was in 2019. This has disproportionately affected younger, less-established workers. With little savings and fewer job opportunities, many Canadian millennials are opting to live with their parents well into their 20s and 30s.
Millennials Are Paying Down Their Debt
Millennials are one of the most educated demographics in Canada, but this achievement came at a high cost. With average college tuition exceeding $20,000 per year, younger Canadians have no choice but to take on large student loans to get the education they need. With more and more Canadians acquiring some form of degree, higher education has become a necessity to remain competitive in the job market.
Thus, millennials spend much of their available cash paying down new or existing loans. Since Millennials have a propensity for spending their income on “comfort” or non-essential purchases, they also tend to lean more on high-interest credit cards. This has led to an ever-worsening relationship between poor spending habits and soaring debt for many young Canadians.
Millennials Invest In Smartphones More Than Anything Else
For many young people, a smartphone represents a gateway to the rest of the world. It is both a powerful tool to manage mundane tasks like bank transfers and phone calls, as well as a portal to the world’s collective supply of information. Millennials can learn a new language, start a business, or keep just keep in touch with friends — all on one device. As a result, millennials don’t mind shelling out a few extra dollars to upgrade their phones on a regular basis.
However, it’s important to note that buying phones is not a completely practical act. Among Canadian and American millennials, there’s also a certain degree of “keeping up with the Joneses” involved. Though there are plenty of low-cost, functional smartphones on the market, a large percentage of millennials opt for more expensive models, even if it means adding even more to their debt.