Millennials (aged between 23-38 currently) are facing more financial challenges than Baby Boomers (aged 55-73) ever faced. There are more than 7.3 million Millennials in Canada – the largest generation since the Baby Boomers. 

Business Insider reports that the financial behaviors of Millennials are heavily influenced by the Great Recession of 2007 which delayed their wealth accumulation, and led to high student debt not to mention an increase in the cost of living. Baby Boomers, on the other hand, peaked in a relatively progressive and stable economy. Special Counsel explains how Baby Boomers reached adulthood during the ‘60s and “tend to be career-focused and status-conscious”. They were also raised to gravitate towards behaviors that ensure financial security, retirement benefits, and health incentives. 

Income, debt, and goal-setting are the main reasons Millennial and Baby Boomer spending habits differ so much. But why are the so very different?

Debt and Spending

Millennials deep in liabilities. A recently published study by Statistics Canada revealed that Millennials are relatively better off than Baby Boomers but are mired in higher mortgage and student debt than any other generation. On the other hand, around 23% of Millennials work two jobs just to make extra money to stay afloat. 

Baby Boomers defaulting. Debt-to-income levels for Millennials is approximately 2.7 % higher than Baby Boomers. Meanwhile, consumer credit delinquencies are much higher for the elderly, according to the Bank of Canada. Delinquency rates among seniors were up 7.2% annually. 

Millennials shop more strategically than Baby Boomers. While Millennials often receive criticism for being the “treat yourself” generation, studies show they’re actually more financially savvy. Baby Boomers tend to stick to the brands they know and like, while Millennials in Canada care more about what the product represents. Millennials research more before they buy, and are more likely to take into consideration customer reviews rather than advertisements. 

Then again, Millennials are also more likely to spend on entertainment and experiences than their predecessors.

Investment Strategies

Millennials take longer to buy their own homes. More than a third of Millennials still live with their parents (up to 47.4% in Toronto and 38.6% in Vancouver). While 55% of Canadian Millennials have taken out a mortgage loan, 35% of those are expecting help from their parents to buy a home. Consequently, markets show a general uptick in Baby Boomers investing in a ‘second’ house – typically for their Millennial children.

Both generations are saving less money. Baby Boomers are spending their savings while Millennials are paying their debts. Roughly 6 in 10 Millennials in a recent Angus Reid Institute survey said they have very little savings. 

While so-called Millennial lifestyle habits are often blamed – avocado toasts and artisanal coffee – for their failure to save money, they’re actually trying harder than any generation. Approximately 26% of Canadian Millennial respondents to a BMO Wealth Management survey said that “saving more” is their top financial priority. But low interest rates on savings accounts coupled with rising student and mortgage debts are discouraging Millennials from accumulating retirement funds. It’s also worth mentioning that 1 in 10 Millennials actually don’t expect to retire anyway. 

Rising Income Gaps Among Millennials

The rising income gap among Millennials relative to Baby Boomers is one of the main reasons why current generational statistics on assets and debts skew substantially towards Millennials. In the same study cited above, Statistics Canada uncovered that the top 10% Millennials account for 55% of the net worth of all Millennials. While the gap among Baby Boomers is relatively lower, the bottom end of both generations experience less affinity towards owning their own house, higher debt-to-income ratio, and less chance of saving up for retirement.

Tags : baby boomersfinancial habitsmillennialspersonal finance
Philipp Postrehovsky

The author Philipp Postrehovsky

Hi there! I’m Philipp, the Head of Marketing here at Progressa.

I love brand building, photography and breaking news. If I am not at the office eating Harvest Snaps I am running or travelling.