Millennial Spending Statistics in Canada

Research shows that spending has increased in Canada during the past decade, but there are differences in how different generations spend their money. There are also differences in what influences their spending and how people are saving and investing their money.

Millennials are the first generation that has grown up during the age of the internet. They are also an educated generation and aware of issues such as global warming. Millennials are also a generational group with more debt than the previous generations. How has this all affected their spending habits?

Millennial Spending Statistics for Canadians

• Millennials were born between 1981 and 1996 and are a tech-savvy generation.
• The post-tax income of Canadian millennials is 25% higher than baby boomers or Generation X had at the same age.
• The income gap between the top and bottom ten per cent of millennials is $591,807.
• Millennials with a university education have a higher net worth than those without.
• The median debt for millennials is $35,400 compared to $19,400 for Generation X.
• 55% of millennials find managing their finances stressful.
• 72% of Canadian millennials want to buy a home. However, 46% don’t think it is realistic.
• Canadian millennials spent an average of $18,428 on essentials in 2019.
• 44% of millennials have seen a reduction in their household income in the last few years.
• Millennials spend less on consumer goods than other generations do and prefer to spend their money on leisure activities instead.
• 20% of millennials say they would be prepared to pay more for products that are socially and environmentally responsible.
• 85% of millennials look for discounts and sales when deciding when and where to travel.

Who are the millennials?

Millennials were born between 1981 and 1996. They are computer-savvy savvy, highly educated, and they are considered the most connected generation. They grew up during the internet era and are used to doing many day-to-day activities on their smartphones and laptops. Many millennials are up-to-date with the latest gadgets and technology.

At the workplace, millennials are proactive, confident, and skilled multitaskers. Millennials seek feedback and leadership from older colleagues, but they also expect others to listen to and respect their ideas. Millennials tend to seek opportunities to progress more actively than previous generations.

How much are millennials earning and what are their worth?

The millennials have a 25% higher post-tax income than Generation X or baby boomers did at the same age. In 2016, the median post-tax income for Canadian millennials was $44,093. The combined buying power of the millennials is massive and they have a combined wealth of around $237 billion.

There was a huge difference between the wealthiest and the poorest millennials in 2016. While the average worth for all Canadian millennials was $9,500 each, the wealthiest quarter of millennials were worth an average of $253,900. For Generation X, the figures were $6,220 for all and $126,900 for the top quarter.

However, the gap in wealth between the top and the bottom 10% is even more at $591,807. In comparison, for Generation X, the gap between the top and bottom 10% was $289,686.

Millennials with a university degree had a median net worth of $116,000, while those without a degree had a net worth of $34,100. Millennials living in Toronto had the highest median net worth of $145,000, and in Vancouver, the net worth was $91,000. These were both higher than the net worth of the average Canadian millennial, which was $70,600.

Canadian millennials have a lot of debt

Millennials in Canada might earn more than the previous generations did at their age, but they also have accumulated a lot more debt. They have nearly twice the debt-to-income ratio of other generations.

They have more debt because of the high cost of education and the rising costs of housing and living. The average college tuition in Canada is over $20,000 which left many millennials with no other option than taking student loans. Some even took out other loans or credit cards to cover the cost of living while studying. Even after graduation, they have faced increased living costs while wages haven’t gone up at the same rate.

According to Statistics Canada, in 2016, the average after-tax debt-to-income ratio for millennials was 216% and the median debt was $35,400. For Generation X, the figures at the same age were 125% and $19,400. This shows that millennials have a 1.8 times higher overall debt load than Generation Xers.

Two-fifths of Canadian millennials say clearing their debt is their number one financial priority. With the current living costs, the millennials are not focused on saving, but on getting out of the red.

How do millennials manage their finances?

Because many millennials have a lot of debt and no savings, they have been forced to manage their money more tightly than previous generations. A study from 2022 by the Meridian Credit Union indicates that 55% of Canadian millennials find managing their finances stressful and frightening.

51% of millennials say they have difficulties coping with their finances because they grew up in a family struggling with economic tension. Despite having difficulties in managing their money, 73% of millennials have not reached out for help or advice. 37% of millennials say they manage on their own because they cannot afford to pay for a financial advisor.

Millennials are struggling to get on the property ladder and are concerned about retirement

Because millennials have accumulated more debt than previous generations and face stagnated wages combined with rising living costs, many of them are finding it impossible to save money to get on the property ladder. 72% of millennials in Canada want to buy a home, but 46% of them see it as unrealistic.

Because of the struggle to buy a home, Canadian millennials are a generation of renters. In an attempt to save, they often share the cost of rent with at least one roommate. Another option is to stay living with their parents, sometimes well into their late twenties or early thirties to save enough to purchase a home.

The same issue of not being able to save since debt reduction takes priority, means 32% of millennials are worried about not having saved for their retirement.

Millennial spending on necessities

In 2019, the average millennial spent $18,428 on rent and household bills, including gas, water, and electricity, as well as other necessities, according to Statistics Canada. It is 31.91% higher than the same expenses for Generation X after inflation changes.

At $36,170, millennials also pay 22.24% higher household taxes than boomers or Generation X. Millennials have also been the most affected generation by the economic downturn. 44% of millennials have seen their income shrink because of the pandemic and general economic changes.

Millennials spend less on consumer goods than other generations

The millennials accounted for 12% of all the spending on consumer goods in 2017. However, the 10.1 million millennials represent 27.5% of the Canadian population. These figures show millennials spend less on consumer goods than other generations.

Shopping habits of the Canadian millennials

Millennials are the most active online shoppers in Canada, making up 33% of online shoppers according to a 2021 research by Statista. Baby boomers represent 30% and Generation X 26% of online shoppers. Amazon was the most popular shopping platform among the millennials, with at least 50% saying they use Amazon regularly.

People from the millennial generation are more likely to be online hyper shoppers, meaning they make at least 25 online purchases per year. Millennials make up 35% of hyper-shoppers. 20% of millennials will regularly compare costs across merchants and they expect a seamless experience from the point of ordering to the delivery.

According to a study by the brokerage firm Edward Jones, almost half of the millennials (42%) identify themselves as spenders rather than savers. In comparison, 28% of Generation Xers and 19% of baby boomers identify as spenders.

While millennials make 43 fewer shopping trips in a year, they tend to spend more per trip than other generations. Figures from 2018 show that millennial spending per trip was $7 more than the Canadian average. The millennial average shopping trip was $55.45.

What influences the millennials’ shopping?

Millennials are more likely to read about products online before making a purchase. They are also more likely to search for popular products and shop online than older generations.

Trends from 2020 also show that Canadian millennials value on-demand and personalized shopping.

Millennials prefer to spend their money on experiences rather than goods

58% of millennials say they would rather spend their money on experiences than on physical goods. They are similar in their preferences to the boomers group where 57% share this view. Experiences include activities such as travel, going to the theatre and concerts, eating out, and other leisure activities.

Millennials will pay extra for the most up-to-date smartphones

The smartphone is a powerful tool and many people manage their lives using their phones including banking, shopping, booking taxes and restaurants and even learning a new language. Because millennials have embraced smartphones as important tools, they are happy to pay to upgrade their phones regularly.

Millennials’ shopping habits show they prefer brands that are socially and environmentally responsible.

Having grown up in a society where they can access a range of information and news with the touch of a button on their smartphones, millennials are in touch with global issues. This makes them more likely to look for brands that reflect their values.

A Nielsen study found that 20% of millennials would be happy to pay more for products from socially and environmentally responsible companies. 30% also said they are more likely to consider organic products.

Canadian millennials are likely to spend more on travelling compared to other generations

Even though millennials have been slower to return to international or national travel, they tend to spend more on travelling than on wellness, health, exercise, or clothing. Over two-thirds of millennials would rather spend their money on experiences than material things.

Before the pandemic, millennials were more likely to travel more frequently than older generations. While older generations often opt for one more expensive trip per year, many millennials choose to travel cheaper but more often.

Compared to the generations before them, millennials are less likely to travel by car. Instead, 71% of millennials in Canada prefer to travel by air. Millennials are also likely to take longer trips, which makes their holiday spending substantial.

Research data from PayPal Canada from 2022 shows that 82% of millennials are concerned about the impact of inflation on their travel plans. The same research data also shows that for 85% of millennials, sales and discounts are essential when planning when and where to travel.

Conclusions

Worryingly, millennial financial data and spending statistics show that they have far less savings to fall back on compared to the previous generations. They have also had to deal with higher inflation, increased cost of living, and slower wage growth, which have all combined to increase the debt millennials have accumulated and make it hard for them to save.

The millennials are the first generation of the digital era, and they are comfortable shopping online. They are more likely to spend more on experiences than on consumer goods and are prepared to spend more on products that are environmentally friendly and socially responsible.