Budgeting in 2021: Millennial v Boomer

BearMoney Team

BearMoney Team

BearMoney is the balanced finance blog for new and old Canadians alike. We are a team of people living international that research, write, and share

Boomer and Millennial

Millennial Budgeting For A Boomer Economy

The conflict between Boomers and Millennials is the stupidest thing to happen in the past 10-15 years. The terms have lost a lot of their meaning and are just used as Conservative vs Liberal and Old vs Young talking points . In fact, the oldest Millennials are in their later 30s and in the United States 50% of ‘Millennial’ women are already mothers. Maybe they were all angst ridden teens at some point but now they are the core of society. In many ways though the economy is run for ‘Boomers’. So Boomer and Millennial is effectively an economic, rather than an age classification. But what does this actually mean?

In simple terms, the economic reality of those born between 1981-1995 is vastly different and vastly inferior to those born earlier*. Truthfully though, the groups don’t easily classify as the media would have people believe. Even still, there are definite differences between the generation that got a unionized job ‘with a firm handshake’ and those working for Uber. Jobs are different and pay less. Everything is more expensive, especially housing. Social safety nets are stretching to the limit. Things are worse. For the average millennial this means a couple of things:

  • It’s harder to own a home
  • It’s more expensive to raise a family
  • Your health now and in old age is increasingly expensive

It does not mean that everything is the fault of ‘Boomers’ and that nothing good will ever happen. It just means that the current economic system has suffered a core failure and needs a reboot. The one thing you can blame ‘Boomers’ for though is blocking any sort of progress. 

Now there are also some advantages that Millennials have that Boomers don’t:

  • It is easier to travel
  • Learning Opportunities are infinite
  • ‘Following The Crowd’ is now a cliché

So what’s the big deal?

Now, this does not eliminate the effects of the negative but it does present a lot of interesting opportunities and considerations when budgeting. A lot of finance gurus give advice to people that live the ‘2.3 kids suburban’ lifestyle. This is becoming a smaller and smaller portion of the population. That is why it’s vitally important to take a pragmatic view of the budget realities facing younger people today. This article is less financing a new truck and more upskilling your photoshop ability,

It’s important to note that the no one solution or lifestyle fits everybody. When we break down the current reality you might find yourself having 50% boomer tendencies. Don’t panic! Although the game has many new rules, it’s not rigged and you can leverage your own personal circumstances to get where you need to go.

Note*: In real terms the lines of these generations are much more blurry, the generations that benefitted from cheap housing and plentiful stable jobs is more like 1946-1975 with those born after 1975 missing out. So for the sake of this article we’ll keep the Boomer and Millennial tags, just be aware that there are 45 year old ‘Boomers’ as well as 35 year old ‘Millennials’.

Renting Owning Boomer Millennial

Renting vs Owning is rarely a choice these days

Housing & Budget – Renting over Owning

In the United States only 4% of property value is owned by Millennials vs 32% by Boomers. This is a massive disparity that has huge consequences for everything from infrastructure to consumer spending and retirement planning. The core difference between owning and renting is obviously the fact that the owner has an asset while the renter does not. The owner can dispose of or leverage this asset to reach life goals such as retirement or reeducation. The renter is usually left with no financial growth at the end of this process, but not always.

Although the renter often has to have ‘renters insurance’ in their home, they don’t really have to take on the risk of ownership. For example, if the roof collapses in your home that you own, you may have to pay thousands in repairs (or insurance premiums). If the same thing happens in your rented home, you can likely just leave. However, the numbers don’t lie and the most probable outcome is that the home owner will be much better off financially over the long term than the renter.

It’s not all doom and gloom though. If you are a renter you have one thing the owner doesn’t have, flexibility. The average lease is much shorter than the average mortgage. This allows you a broader range of tools to be reactive or proactive in your life. Landed your dream job on the other side of town? You can move closer. Want a balcony or all your utilities included in your rent? You can do that too. Hell, you can even rent cheaply and invest your surplus in securities that can beat house price inflation (unless you live in Toronto!). There is a value in flexibility just like in security.

I’d buy a house if a condo wasn’t $1 Million

For the millennial, the renting vs owning choice is rarely a choice. Most of us have been priced out of the market. A large percentage of those people would probably like to own instead. Whether by choice or circumstance though, you can leverage a renters’ life to get you closer to your goals.

The Millennial Home: Trading security for flexibility. Not indebted, No Ownership

The Boomer Home: Trading flexibility for security. Indebted, Ownership and Wealth (likely).

This means that your budgeting around housing will likely focus on semi-fixed costs for rent and utilities and either saving to buy or reinvesting. As an owner you are likely to focus on variable maintenance and home improvement costs. 

Your saving/investing space will be partially dictated by this distinction. If it’s going to take you years to save a down payment consider investing your cash instead of letting it sit in a bank account. We have a brief introduction about doing just that here. Whatever you do, make sure to make renting work for you!

Millennial travel spending vacation

Wanderlust is the Keeping Up With Jones of our time

Location & Budget – Generation of Nomads

In many ways this comparison is linked to the first. The flexibility of the less stable life led by Millennials opens up a world of geographic possibilities. Housing, the nature of work, cultural globalization, and cheap air fares have combined to make it much easier for somebody from Utah to live in Uruguay than even 20 years ago.

Up until the late 1990s it was still quite rare for people to move far away from their place of birth, whether that is within the country itself or internationally. Nowadays most young people have ideas of living in multiple different cities or countries. The affordability of air travel has meant that the average person saving $50 a week could travel to Europe every single year on vacation. What this means is two things:

  • Travel is more important with different goals
  • Millennials feel less rooted in their hometown

Travel Is More Important With Different Goals

This is a big one. For the Millennial, travel is a much more normal part of living, in fact it is used in many ways as a signal that you are middle class. ‘Finding Yourself’ and having #wanderlust are very common themes among people in their 20s today. On the other hand, the Boomer tends to see travel as something for relaxation primarily, a few weeks away from the ‘old grind’. It is functional rather than social. Generally the divergence comes from seeking physical relaxation versus mental stimulation.

Both groups are chasing different things, for a variety of different reasons (and again this doesn’t apply to everybody in each age group). Functionally this means the average Millennial wants to take more varied trips, more often, at a higher cumulative cost. The Boomer will generally have a generic vacation routine that will cost a similar amount. It is rare for the Boomer to spontaneously book a flight to India, for example.

To this end, travel is a monthly expense for the Millennial as they A) will want to travel and B) will want to travel at varied times. Travel therefore becomes another facet of your finances, no different from your gym membership. So in budgeting, you will need to break down the annual cost of travel and have that stowed away monthly over the course of the year. Nothing derails your finances like a $1,500 vacation paid for by credit card…

Millennials Feel Less Rooted In Their Hometown

It’s difficult to feel like you want to settle down in a city if you can’t afford housing and the job prospects aren’t great. This is not an issue that most Boomers had to face. When we set aside large waves of international migration during the rise of globalization, the Millennial generation are driving unprecedented levels of nomadic behavior. Many young people are now aware of, and able to relocate to, places that provide them more economic and social opportunities. The fact that the world is more interconnected than ever before makes it much easier to leave your hometown. 30 years ago moving from England to Toronto may have been a one way trip. Nowadays people are able to fly back a couple of times a year.

Although it may or may not be cheaper to relocate today than in 1970, one thing is certain, the opportunities to move are greater than even before. That means that you have options when it comes to reaching your finance goals. There is a high likelihood that you can find an accessible relocation possibility that will give you the financial life you want over time.

Millennial food spending kale

Food habits have changed generationally

Food & Budget – Eating Broad and Healthy

The differences in food habits between the categories of people are probably the most stark comparison that we will have. As with the ability to travel, the ability to experience food in different ways has created a different grocery shopping mentality than previously existed. In addition, the explosion of healthy eating and the rejection of the SAD (Standard American Diet) by more (but not enough) Millennials have made our food habits come full circle. How does this translate into financial decision making though?

The primary differences are centered on the ideas of brand/store loyalty and ‘shopping around’. There is a massive difference between the Boomer and Millennial on these issues. The older group buy brands and things that are seen to be ‘popular’ attaching popularity with quality. In addition they value customer service and the relationships that they build with their stores of choice. On the other side, the Millennial shopper doesn’t care about brand or store loyalty because they have a different understanding of the relationship between business and customer. In addition they also have less money to spend.

For budgeting sake, this means that unlike the Boomer, the Millennial is simultaneously seeking a broader food ‘experience’ with less disposable income. In a nutshell, the Millennial likes to and in some ways has to bargain hunt, leveraging technology to help with this. The Boomer has enough money to buy what is adequate at a generally inflated price (see store brand vs name brand). It is interesting to note that the extensive use of coupons is high among much older shoppers (70+) similar to the Millennial (as well as grocery spending).

Jokes about kale and soy lattes aside, if you are a Millennial budgeter in 2021, you’re likely to have a few different sources of food for your home. Farmers’ markets, butchers, big box stores. In addition, brand loyalty is probably not your thing either. This makes your food buying more time intensive as well as more changeable. As you have less to spend on food and want higher quality products, you definitely need to do a grocery list. Buying in bulk is also not going to be an option for you if you’re renting or in worse socioeconomic situation than the Boomers.

The key ideas for the Millennial budgeter in 2021 should be – Grocery Lists, Batch Cooking, Meal Planning.

Millennial board games nights are very popular

Oddly enough, both generations like board games now

Hobbies & Social Spending – Crotchet v Golf

Millennials are apparently the generation of ‘snowflakes’. They are overly sensitive and weak-minded people. In social terms this means that they place their energies into ‘unproductive’ things like art or protesting systemic injustice. The stereotype of the Boomer is no more flattering. The Boomer is entitled and ignorant. They spend their energy engaging in base level social activities and ‘stick in their lane’. It’s Quinoa and Crying vs Bud Light and Racism. Of course this is 99% utter nonsense.

It does however touch on something that has a transformative impact on our society. Earlier generations had a much more cohesive and generic idea of ‘fun’. Golfing, fishing, gardening. All of these things were standard ‘suburban’ hobbies for many years. In the case of golf, the sport is entering a terminal decline. This is no reflection on the fun of golf itself but merely an acknowledgement that Millennials like different things.

The big ticket hobbies for Millennials are things such as fitness, hiking, casual dining, and gaming. In addition, a lot of millennials dabble in ‘domestic’ hobbies for entertainments sake, such as cooking, baking, design, and gardening. Just like with food expenses, they want more variety for better value. To take an example from above, a person can have a years gym membership, a full camping loadout, and a PS5 for the price of an annual golf membership. It seems like a no brainer.

The budgeting drawback for this is that now it is a basic social achievement to be involved in a large number of things. Depending on circumstances it can be ‘weird’ for you to not hike, or game, or work on communal farms (hi Vancouver Island). In terms of meeting spending and saving targets then, decisions have to made about core hobbies and acceptable expenses. Viewing ‘travel’ as one of your hobbies would compound this issue.

A great way to experience as many hobbies as you want is to leverage your social circle around different activities. For example, if you are into board games (which are pretty popular and expensive these days) finding groups of people with different games can save hundreds annually. The same can be said of most popular Millennial hobbies.

Social Spending – Boomer Booze v Millennial Merlot

We mentioned above that casual dining is a very popular activity among Millennials. Foods like Sushi and Shawarma are very popular with good reason. The overall difference is yet again Money & Routine vs Variety and Value. An entire generation of people have grown up in a multicultural food paradise. 30 years ago it was not uncommon for people to stick to the food that was traditionally ate in their home country. Today it is a 180 degree change.

Ironically enough, no generation gap has stopped people chowing down on unhealthy fast food but the advert of the ‘age of the Millennial’ is still going to kill the traditional chain-style restaurant. They are not interested in paying $15 for a burger at a chain when they can pay $15 for a fully customized burrito. Again this means that the Millennial budgeter will be spending less overall but in more places. This is likely also going to be a larger comparative percentage of their income than a Boomer.

App ordering and home delivery alongside full customization has taken the formality out of the food experience. The same goes for the drinking experience. The portion of Millennial drinking that is geared on craft beer and cocktails is impressive, but also part of a wider trend of drinking less and drinking more mindfully.

So the strawman Millennial wants to have $15 sushi followed by no more than 2 Pink Gin and Elderflower Tonics, three nights a week. For budgeting purposes this means that folding your social and grocery spending together is a good idea. If eating out is going to be a significant part of your life you will need to balance that with the food you buy for home. Seeking value is key especially when it comes to take out. Uber eats is great but the delivery fee and tip can sometimes be almost 30% of your total bill and you could probably walk there anyway. Eating out around specials on certain days is a great tip too.

In a practical sense though, having a unified food and social budget is the best idea. Of course you actually have to stick to this budget.

The Modern Budget Goal

So overall the reality for the Millennial budgeter is pretty clear: you have less money and more things you need to do. You also have more opportunity and less social constraints. From person to person this balance can vary, even depending on the day. This is all perfectly normal. The general trends are clear though.

The key challenge then is navigating an economy that is not suited to give you what the Boomers had. In the same way, the Boomers are having to deal with the decline in their traditional ways of living. Of course, objectively speaking the economic system they presided over is trash and deserves a decline, but that doesn’t make it any less tough and adjustment.

The one overriding concept that the Millennial needs in their budgeting toolbox is value. Without seeking and finding value you are going to waste time and money that you don’t really have. A household budget is a must, especially one that takes an individual and wholesale view of your finances. Have a look at our Budgeting Tool to see if it can help you figure out where to divide your spending.

All of your spending needs to add value, you don’t have the space to engage in pointless things like previous generations. This also means cultivating your social circle so that you can enact a value focused budget without negative external pressure. Don’t associate with people who waste money and don’t strive towards their goals. Built a positive support network. Yes we all have to do more with less, but there are pathways to success open to us, we just have to go out and follow them!


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