You’ve probably heard the jokes about how millennials would be able to afford rent if they just stopped eating avocado toast. Or, there’s the lamentation that millennials are still living in their parents’ basements.
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The reality is that millennials have managed to tap into a phenomenon that previous and subsequent generations missed out on: financial minimalism.
Millennials are the generation that Marie Kondo was speaking to when she told them to clean out their closets. They’re the generation getting 401(k) plans and parental leave written into their professional contracts. And sure, they might still be living in their parents’ basements. But … is that a bad thing?
Here’s a look at the ways millennials are winning at financial minimalism and what every generation can learn from these tips and tricks.
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Spend Less With Less Debt
One of the biggest lessons millennials learned from the generations before them was not to go into crazy debt. Think about it: Many of them graduated from high school and college right as the country went into a recession. Jobs were harder to get, money was harder to make, and banks and lending companies were failing.
Many decided then and there not to end up in that same boat.
Millennials and Gen Z are now taking on fewer expenses, spending 20% less than older generations. They’re also paying back their credit card debt more, with an average FICO score of 750.
They also have significantly less debt than Gen Xers, with $27,000 in non-mortgage debt compared to $33,000 for Gen Xers, according to a 2020 Experian report.
This approach to finances is one we can all benefit from. It will keep us more financially independent and more in control of our lives.
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Better Jobs
Entering the workforce just after the 2008 financial crisis, millennials had to scale back their financial expectations. This meant they had to pinch pennies and keep sending in resumes, keep going to interviews, and get used to rejection.
This experience made them more selective when it came to getting into their careers. They took “jobs” while they waited, and they held out and demanded better pay and benefits. Millennials are largely responsible for companies offering excellent benefits, wages, and financial packages.
They also tend to switch jobs for better opportunities, which holds those companies accountable for offering better benefits.
It’s an excellent strategy when you think about it. Get the job you need now to keep you alive, and don’t settle for a bad position in your career. Demand better. Supply tends to meet demand, after all.
How is this financial minimalism, you ask? It’s much more financially efficient to hold out for better-paying work with better benefits, so you can make more than you spend. It also provides more opportunities for a better work-life balance.
More Affordable and Flexible Transportation
Millennials often prefer to drive electric cars, with 59% believing it’s the future of cars. Additionally, 44% of people aged 18-34 are also willing to give up their car altogether in favor of ride-sharing, bicycles, public transit, taxis, and rental cars instead of buying a personal car that is high maintenance.
By avoiding owning gas cars, millennials avoid a lot of the headaches and financial struggles associated with them, and they get to keep more money in their pockets while doing less.
Biking and public transportation are also more environmentally friendly, and they will save large amounts of money in the long run.
Free or Cheap Learning
Millennials also looked at their predecessors and soundly decided against going into thousands of dollars of student loan debt. Indeed, you’ll find more millennials taking advantage of YouTube tutorials, online classes, and other free learning options instead of paying for college.
At work, millennials demand more developmental opportunities from their employers because they’re constantly thinking about how to continue to build their resumes. What’s more financially minimalist than getting your employer to educate you for free?
Outside of professional employers, millennials tend to be more entrepreneurial, with over 70% interested, so they rely less on employers to pay them a wage.
Part of that entrepreneurialism includes offering classes on the information they have. So, it creates a kind of community of teaching, learning and sharing experiences.
This approach to learning is one we can all benefit from, financially and otherwise.
Cook at Home
Yes. Millennials invented avocado toast on a grand scale.
But they largely make their avocado toast at home, with nearly 90% making home-cooked meals in 2022, according to Statista.
While Gen X and older generations are dining out on $50 steaks, millennials are munching all the way to the bank.
Sure, you’ll pay a couple of bucks for avocados, a couple more for a loaf of bread, and a couple more for eggs and veggies. But in the end, you can make 10 avocado toast meals for the same price as a single meal out.
So, yes, millennials might spend a bit more on food, but it’s fresh, healthy food that they’re prioritizing. In fact, 62% are willing to scale back on fashion and 55% on tech to make room in the budget for healthier foods.
The financial minimalism here is a long-term look at spending less on medicine and the healthcare system. Spend a bit more now, save a lot later.
Millennials deciding to cook fresh, healthy meals at home is not an expense or a luxury.
It’s minimalism we can all benefit from financially and health-wise.
Experiences Over Things
Finally, if millennials do have extra money, they’d rather spend it on experiences than things. They’re hiking, traveling, skydiving, mountain climbing, and even visiting spas instead of buying a designer bag at full price.
This is minimalism at its finest because many of these experiences are free or cheap when compared to all the “things” that can cost so much.
Sure, they may pay for a flight across the country, or even the world, and then a hotel to stay a while. But that’s still cheaper than buying and maintaining a luxury vehicle.
How Every Generation Can Benefit From These Lessons
Millennials have demonstrated that living with less can mean living better.
Baby boomers, for example, could benefit from adopting this minimalist mindset, scaling back on unnecessary purchases.
Gen X can take notes, too. Like millennials, they can opt for affordable homes, budget more effectively, and explore remote work to boost their income and improve comfort.
Gen Z is already catching on. Millennials have shown them that flexible careers and multiple income streams, such as remote jobs or turning hobbies into side hustles.
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Sources:
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CNBC, “The average millennial has $27,251 in non-mortgage consumer debt–here’s how they compare to other generations”
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Experian, 2020 State of Credit Report
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NY Post, “Why over half of US car owners consider their vehicles ‘part of the family’”
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Progressive Policy, “69% of Americans want their next car to cost less than $50,000″
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Statista, Cooking practices of Millennials and Generation Z in the United States and Canada in 2022
This article originally appeared on GOBankingRates.com: 6 Ways Millennials Are Winning at Financial Minimalism and How Every Generation Can Benefit
