Money and the Millennial Generation

December 14, 2004 | By Kevin Niedermier

To listen to the radio segment, click here.

Americans like to spend money and the nation’s teenagers are big spenders too. As a group, this so-called Millennial Generation embodies the wealthiest teenagers in American history. And marketers are working hard to attract them. These kids, though, are not easy targets.

Boys and girls like to fit in with their peers. If that means having the latest electronic gadgets or fashions, the Millennial generation usually find ways to get them:

ADAM: “Money’s very important. I work hard to get money, I like spending money. I try to look for good deals, you know? I try to make money as often as possible, with, y’know, jobs or cutting grass or whatever. I need money a lot of the time so it works out…and I just try to think of new ways to make money a lot, it’s very important.”

Millennials are not shy about opening their wallets. And one-in-three have a credit card inside. Their parents like buying things too…to the tune of more than $600 billion in national credit card debt, a record high. Meanwhile, their personal savings are at an all-time low. But a growing number of their offspring show respect for money:

RACHEL: “I think it’s important for everyone to value it and know that it doesn’t just grow off trees.”

This stylishly dressed 11-year-old’s attitude is characteristic of her Millennial counterparts. She will buy what she wants, but not at any price:

RACHEL: “I try not to spend too much money, but yeah…I love buying stuff and I love shopping and everything, but today, like, all the clothes and everything, it’s just so outrageous, the prices. Well like, today for instance, I got a purse, it was originally $20 but I got it for $6, so, just sales that are marked down a lot.”

This girl and her American peers still buy more than $170 billion worth of stuff each year. That’s about five percent of all U.S. consumer spending. But with targeted advertising splashing all around them in print…on TV…the Internet…and at school, it is a wonder many Millennials don’t spend more:

RYAN: “Uh yeah, I mean a lot of new colognes and stuff like that, when I see people on TV using ‘em, y’know, I wanna go out and just purchase them because they’re like cool…and like clothing advertisements that really…is intriguing, so yeah, advertising is a real big way on spending money, I’d say.”

Advertising to Millennials is a multi-billion dollar a year business. University of Virginia sociologist Murray Milner says the job of selling to teens is becoming very specialized:

MILNER: “It’s, I think, unquestionably true that the marketing industry puts much more energy into marketing to teenagers. There’s elaborate research firms that focus simply on teenagers in terms of as a market. Moreover, marketing people have become very conscious of the role that teenagers play not only as consumers, and of course they have a lot of money to spend, it’s estimated that there’s now $100 billion a year spent by teenagers…which is roughly the initial cost of the Iraqi war, so I mean, it’s not an inconsequential…it’s not the major portion of the economy, but it’s not inconsequential. But in addition, they play a key role in influencing what parents buy, as well as their being cultivated as consumers interested in particular brands for the long term.”

But with such a self-reliant group, it’s not easy for advertisers to get their messages across:

TOM: “Yeah there’s a lot of advertising everywhere, but I don’t know…The more advertising I see, the more it kind of turns me off of buying things I think, ‘cause I don’t like all that advertising being right in my face all the time. I don’t buy any of that stuff. I basically go, if somebody else has it I ask them, y’know, what they think of it or I’ll try it out myself. I don’t really listen to commercials and ads and newspapers and everything.”

Teenagers are exposed to an estimated 3000 advertisements a day, according to some sources. Boston College sociology professor Juliet Shor studies the ad industry. She says Millennials are starting to filter out the steady bombardment of traditional advertising. So new tactics are being used, like enlisting teen leaders to market products to their peers:

SHOR: “For example, they would recruit what they call ‘Alpha Kids,’ they tend to be the popular kids who are the trendsetting kids. This is from that whole idea of an alpha male in a group of animals, it’s sort of the socially dominant. And they enlist these kids, they give them either money or stuff and they say now we want you to pass out this product to your friends, or tout this product to your friends…They’ll be given free samples of the product for example, and asked to give them out to their friends and talk to their friends about why it’s such a great product and so forth.”

Marketing consultant Neil Howe helped coin the term “Millennial.” He says the spending habits of this age group has evolved the last ten years:

HOWE: “It climbed very rapidly from the mid to late 1990s, and it’s been kinda steady since 9/11. We had a recession, and we’ve had parents who are in a little more trouble then they were before. But its held about steady, maybe $100 a week in spending money for kids at the older edge of that range, 18, 19. Maybe a $100 a month for 12 and 13-year-olds. It sounds like a lot to some people, it sort of depends on whether you’re a parent and whether you’re used to seeing these kids in action or not.”

Howe says this new generation is taking what could be called a more conservative turn. Millennials are rejecting what they consider to be the smugness, cynicism and blatant sexuality of their predecessors, the Generation Xers:

HOWE: “There has been a new emphasis recently, on looking for thrifty places to buy. The strange thing to me to notice in the last couple of years is the increasing allure of places like Target, Old Navy, obviously, the little bit more of the straighter look from places like American Eagle. And some of the edgier places have actually had trouble over the last year or two—Abercrombie & Fitch, Wet Seal, places like that.”

For a comparable mindset, you have to go back about 70 years to the so-called Quiet Generation. They grew up during the Great Depression and learned to scrimp and save for what they wanted. Then came the Baby Boomers, a prosperous post-war economy, and a spending boom. That spending carried over to Generation X.

Ann Clurman is with the marketing and social research company, Yankelovich. She says the Millennials are not necessarily thrifty or conservative. She calls them pragmatic:

CLURMAN: “They grew up in a time when most of us began to realize that this is a short term world in which things can change very fast, and you need to be able to protect yourself and take care of yourself. So that’s one of the reasons they’re very pragmatic. Second, they are a generation that talks a lot with their parents—they’re not talked at, they talk with. There’s a lot of shared decision-making going on, discussions about saving money are starting very early. Discussions about important family decisions…where to go on vacation, and what kind of car to buy…those discussions start very early. Discussions about college start very early, so that pragmatism and that thoughtfulness, a lot of that comes from the home.”

Clurman and other marketers are finding that this new generation has an independent streak:

CLURMAN: “They also look around and they believe that, they don’t…While they don’t dislike adults, there are certain things they see in their own parents that they don’t want to happen in their own lives. They don’t want to be as stressed as their parents, they want to be able to relax. And many of them say that being in control of their lives is a sign of success in adults. They value adults that are in control of their lives. So when they look at that, they say what do they need to do to be able to achieve that when they grow up?”

It’s a more complicated financial world than their parents or grandparents experienced. These kids will be expected to make more decisions - possibly on how to invest their social security money.

Larry Gold teaches personal finance at Shaker Heights High School. He says most kids still come into the elective class believing money is simply something to be spent. But that’s changing:

GOLD: “I’ve noticed that with the kids that they do have savings accounts, their parents are trying to get them to get into the savings mode, most of their savings is for college.”

Planning ahead is a Millennial generation hallmark. This 17-year-old is one of Gold’s many students planning for college and beyond:

KEVIN: “Me and my father are looking into buying some stocks, some penny stocks and mutual funds now. So I might take the money out of the savings account and invest in the stocks and stuff like that, CDs, things of that nature. I do want to probably get into the business field, probably own some real estate, be my own boss, be an entrepenuer, so…I wanna live comfortably, I don’t wanna be all stressed out or anything. I know if I start a business I’m going to be stressed out but I don’t wanna be stressing out every day and not even living life to the fullest, and not even going anywhere on vacations or anything. Buy something nice, I wanna treat myself or whatever.”

Thanks to the Millennials, college enrollment is at an all-time high.


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