Purchases they wish they had not made? They have only had a few
Regrets? Most Americans have had more than just a few. Millennials? Not so much. As millennials scramble to get a foothold on the property ladder amid scathing reports of these young Americans splurging on avocado toast, they’re often given advice by Generation X and baby boomers about what they should and shouldn’t do. They are satisfied with almost all of their purchases.
Between 60% and 85% of millennials don’t regret the money they spend on their local community, health care, utilities, arts and entertainment and education, electronics, groceries, gym and fitness, movies, travel, debt, pharmacies and bars. In fact, there are only four items on the list of 19 categories hat half or less of millennials actually don’t feel satisifed with their purchases.
So what do they regret? Half of millennials regret spending money on coffee and restaurants, while 62% regret fast food and 97% regret bank fees, according to the survey of 1,000 people aged 20 to 26 by Durham, N.C.-based Common Cents Lab, a financial research lab at Duke University. We’re more likely to regret guilty pleasures, said Dan Ariely, behavioral economist at Duke.
All those small purchases can add up, however. Millennials spend more than an average of $2,300 more per year than older generations on five key items: groceries, gas, restaurants, coffee and cell phone bills, a recent study released by personal-finance site Bankrate found. “Often, it’s the minor, habitual expenses, such as take-out and alcohol, that wreak havoc on your budget,” Bankrate said.
“Millennials are falling victim to common financial vices, such as spending money in coffee shops,” it concluded. The average millennial dines at a restaurant or buys take-out five times per week and nearly 30% say they buy coffee three times per week. More than half of millennials (54%) eat out at least three times a week, compared to roughly one-third of Generation X-ers and baby boomers.
To combat the idea of forgoing lattes in the name of becoming a millionaire, Beth McMillan, a Ph.D. student in the computer science at the University of Oxford, found that, if instead of buying a latte, you invested 3 euros ($3.19 in U.S. dollars) for every day you bought a latte into an account that paid 6% interest for 50 years, you’d end up with 318,135.57 euros, or $337,942.69.
The latest study conducted in partnership with Qapital, a fintech app, a team of behavioral economists cited four positive personal-financial habits of millennials: Put your essentials on autopay (and resist subscription-based gift boxes), spend money on enriching the lives of others, limit impulse purchases (unless it’s just a bottle of Clorox) and don’t sweat the small stuff.
Participants in the latest survey were asked to rate how satisfied they were about recurring versus nonrecurring expenses. Millennials only rated their 10% of recurring items.Millennials reported being most satisfied when spending on necessities such as utilities, rent (78% satisfaction) or personal enrichment such as community (83% satisfaction) and education (76%).
The Common Cents Lab survey had some curious findings: Millennials regret smaller purchases much more than larger ones. On average, they reported a high level of satisfaction for purchases taking up a larger portion of their monthly income. These lessons can provide a “blueprint” for a more satisfying financial life, said Kristen Berman, co-founder of Common Cents.
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This article was licensed through Dow Jones Direct.
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