• Millennials are “dramatically financially worse off” than older generations were at similar ages, a new study by Deloitte has found.
  • Millennials’ spending is the same as their parents’ when it comes to the proportion of their income going to things such as food, restaurants, and alcohol – they just have less money to spend.
  • The study cited Census data indicating that the net worth of American consumers under the age of 35 had fallen by more than a third since 1996.
  • Millennials are spending more on nondiscretionary expenses, with the cost of student debt growing by 160% from 2004 to 2017.
  • Visit Business Insider’s homepage for more stories.

A new study argues that millennials aren’t actually different from Gen Xers or baby boomers in how they spend their money – they just have less money to spend.

Millennials have been blamed for the murder of industries as varied as golf-equipment makers and razor manufacturers, as sales have tumbled in recent years.

“They are often branded as being more narcissistic, more idealistic, more socially-conscious, and more experience-oriented than any of their preceding generations,” a Deloitte study published this week said. “They have even been blamed for ruining everything from movies to marriage!”

The study – written by Kasey Lobaugh, Bobby Stephens, and Jeff Simpson – seems to debunk many of the narratives about millennial consumers.

Deloitte’s survey of more than 4,000 consumers, 450 billion points of location data, more than 200 billion credit-card transactions, and government data concludes that millennials spend their money on roughly the same things that their parents did 30 years ago.

Millennials, however, are “dramatically financially worse off” than older generations were at similar ages, the study said. Since 1996, the net worth of American consumers under the age of 35 has fallen by 34%.

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The financial crisis and college debt – not avocado toast – are changing how millennials spend their money

avocado toast

Foto: Millennials don’t spend more money on food than older generations did at similar ages, the study found.sourceBrendon Thorne/Getty Images for Virgin Mobile

Money spent on food, alcohol, and restaurants accounts for roughly the same percentage of millennials’ income as these categories did for people of the same age in 1997. In other words, the study indicates millennials aren’t skipping out on homeownership because they’re wasting their money on avocado toast.

“In many ways, the consumer hasn’t fundamentally changed,” Lobaugh, Deloitte’s principal and chief retail innovation officer, said in a statement. “Instead, their behaviors have been triggered by a rise in nondiscretionary expenses and the growing bifurcation between high- and low-income groups.”

People spent 16% more on housing in 2017 than in 2007. Healthcare costs increased by 21% in the same period. Education spending skyrocketed by 65% as student debt soars. Since 2004, the cost of student debt has grown by 160%.

All in all, 17% of 25- to 34-year-olds’ income went toward these nondiscretionary costs in 2017, compared with 12% in 1997.

upenn graduation

Foto: Education costs are skyrocketing.sourceWilliam Thomas Cain/Getty Images

The rise in nondiscretionary costs has hit lower-income millennials especially hard. The bottom 40% of American consumers had less discretionary income in 2017 than they did a decade prior, the study said. The next 40% didn’t do much better, with only the top 20% seeing meaningful income gains.

Comparing the growth in income over the period for a group of households making more than $100,000 with that of a group making less than $50,000 shows just how stark this difference is. The study said income growth for the higher-income group from 2007 to 2017 rose by 1,305% more than it did for the lower-income group.

Deloitte’s conclusion echoes a 2018 study from the Federal Reserve that found millennials had fallen behind economically because they came of age during the financial crisis.

Read more: Millennials are killing countless industries – but the Fed says it’s mostly just because they’re poor

“Millennials are less well off than members of earlier generations when they were young, with lower earnings, fewer assets, and less wealth,” the study said, adding: “Conditional on their age and other factors, millennials do not appear to have preferences for consumption that differ significantly from those of earlier generations.”

Average real labor earnings for male household heads working full time were 18% and 27% higher for Gen Xers and baby boomers when they were young compared with millennials, the study found. For young women, the difference was smaller – 12% for Gen Xers and 24% for boomers – but earlier generations were still making more money when they were younger among similar demographics.

Overall, the picture painted is one in which millennials have less money to spend than boomers and Gen X had when they were the same age. With less money to spend, they’re forced to be choosier. Certain purchases – such as a car or a home – remain out of reach for many, forcing a further shift in how millennials spend their money.

While millennials may be sending certain industries’ sales into free fall, the Fed and Deloitte come to the same conclusion: The economy, not the generation’s personal preferences, is to blame for millennials’ killing spree.