UK, 16 September 2019: Experian’s latest Spending Index Report has found that as Millennials progress at work, their purchasing power continues to go from strength to strength. However, this growth is not without its challenges, with the cost of living and the need to invest in ongoing education growing just as fast.
Mature Millennials are at the top of their game
Millennials, defined here as 26-40 year olds, make up almost a fifth of the UK population[1]. With the oldest Millennials around 40 years of age, they are no longer taking their first steps on the career ladder, and are becoming more senior at work. Their growing seniority is mirrored in their income – with the average Millennial expecting to see income growth of 3.2% in 2020. This number rises to 3.4% for older Millennials, aged 36-40.
As their salaries increase, so will their spending. Experian forecasts that Millennial spending will grow at a higher rate than other age groups, by 2.6% versus an average of 2.5%.
This group is also set apart by their enthusiasm for the burgeoning gig economy. Millennials are moving away from traditional models of employment in favour of lifestyles that offer greater freedom. The report found that income from self-employment is expected to grow by 3.7% in 2020 amongst Millennials. They are also expected to see 5.1% growth in income from “other sources*”. Only those in their 40s are expected to see a higher percentage increase (3.4% vs 3.0% for millennials) in overall net income.
Amir Goshtai, Managing Director of Experian Marketplace, comments: “It’s encouraging to see the Millennial pound strengthen in the UK as the cohort moves into more senior positions at work. Their contribution to the UK economy is growing due to their varied approach to the jobs market, and their purchasing decisions are shaping today’s economy more significantly than ever before.”
The growing pressure of everyday costs
Whilst Millennial salaries are increasing, the picture isn’t totally bright. The growing cost of living for Millennials is rising in tandem with income boosts. This year’s report finds that Millennials will see a rise of 3% in housing costs (including the costs of rent, mortgage and energy bills) in 2020, which increases to 3.2% for younger Millennials – aged 26-30.
Comparatively, those aged 41-45 will see higher income growth than Millennials, will only see a rise of 2.8% in housing costs.
Additionally, Millennial spend on travel is set to increase more than any other group in 2020, at a rate of 2.9% versus an average of 2.0%. This is explained by the changing nature of the jobs economy, where Millennials are now expected to be more flexible in how and where they work. These everyday costs mean the ability of Millennials to save a percentage of their net income is lower overall for this group (11%) compared to over 40’s (14%).
The future is bright
Though expenses are increasing, it’s clear that Millennials are investing for the long-term to the best of their ability. As Young Millennial vocational workers (aged 31 on average) strive to progress their careers in an increasingly competitive jobs landscape, they continue to invest significantly in their ongoing skills development. The data shows an expected increase of 7.6% in spending on education for this group compared to an average of 3.9% for all other age groups.
The result is that whilst the growth of Millennial spending power means the group is contributing more than ever to the UK economy, a number which is only expected to rise, the expenditure pressures they face in the short-term should not be ignored.
Amir Goshtai, continues: “We must remain aware of the changing expenditure pressures facing this generation. As the jobs landscape continues to evolve, Millennials are required to financially invest in their own skills development and remain flexible if they want to thrive at work. Combined with the growing costs of housing and everyday living, the ability of Millennials to save is lower than those who have come before.”
ENDS
Predicted spending growth in 2020
*‘Other income’ category includes income from a variety of different sources including earnings made from baby sitting, working as a mail order agent, trade union benefits, payments from insurance schemes and regular allowances.
Methodology
Experian has used its proprietary consumer insight system, FSS, as the foundation for the model.
The income and spending information from FSS has then been broken down into more detail by Experian’s expert team of in-house economists, and combined with our UK Macro analysis model and the ONS Living Costs and Food Survey to deliver the insights in this report.
Media Contact
Priya Sahib, Consumer PR Manager, Experian UK&I
Tel: 07816 491152 / Email: Priya.Sahib@experian.com
Weber Shandwick for Experian
Tel: 020 7861 0762 / Email: experian@webershandwick.com
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[1] Overview of the UK population: August 2019, Office for National Statistics