• Barrie van Zyl – Senior Manager at Alexander

Millennial Saving and Spending Habits

Over the last decade, marketing companies, advertising agents and retailers have been struggling to understand millennial saving and spending habits. This generation, also known as Gen Y (born between 1977 and 1995) has been labelled as lazy and narcissistic on the one hand, and as a tech savvy generation that will shape the future on the other hand.

Unlike previous generations, generation Y has formulated very different attitudes towards their jobs, careers, skills development, social interaction, financial security and asset accumulation. Most believe that this is due to the rapid advancement of technology and its impact on our everyday life, however in South Africa the individualized historical experience and overall family context add further dimensions to millennial saving and spending habits.

Millennials feel differently about the world and how they interact with employers. They want to interact digitally, they need mobility, and “life experience” is more important to them than “job security”. They are not interested in “social wage employer provisions”, but would rather work for multiple employers over a range of positions. Millennials also do not want to wait for their careers to develop, but rather see all opportunities as a journey that will lead them to self-enrichment.

Their attitude towards learning is that “the world is your teacher”, and they often base their decisions on what others have already experienced. In the fast pace world of the millennial, information is available at your fingertips, decisions are made quickly, and instant gratification purchases are simplified through digitization and globalization.

It is therefore no wonder that as the millennial outlook on life is different to other generations, their outlook on savings and investment is just as different. The unfortunate reality however is that these trends are not on par when comparing global millennials with young South Africans. In the United States, research has shown that millennials are quite good at saving money. US millennial parents are saving around 10% of their income for retirement, and over one third of millennials are saving at least 15% of their total income.

In South Africa, only 38% of millennials are contributing to a formal retirement vehicle. Youths are saving at a much lower rate than their US counterparts, which could be attributed to the high unemployment rate, family commitments, credit cards and student loans. The future of this generation is therefore looking quite uncertain on the basis of current saving trends and debt commitments.

Those millennials however that do save and invest, are moving away from traditional investments such as retirement annuities and endowments. Millennials are looking for a faster and easier way to grow their wealth, which is why cryptocurrencies saw a massive influx of investors who were attracted by the huge, yet volatile gains. Millennials are also more entrepreneurial, preferring to start a business, or invest in one or multiple start-up firms through friends and family.

Unlike previous generations, millennials do not believe in asset accumulation by acquiring assets, but they rather try and secure the accessibility of those assets. This however does not mean that millennials do not invest. Unit Trusts are quite popular with millennials as they can open an investment account online, invest cost effectively, make their own changes, and they can track their performance through a mobile app. They also favor tangible assets such as gold and Krugerrands, and many millennials are looking at alternate investment options such as unique collectables and art.

It is important for millennials to find the right balance between their “here and now” experiences and their “long term needs”. Many young individuals are starting to understand the importance of making certain sacrifices now in order to accumulate wealth over time.

Just as one needs to plan for an overseas trip, a new car and even dinner with friends, so too must the youth of today plan for a better tomorrow, brighter future and a self-supporting retirement.


Alexander Forbes Financial Planning Consultants (Pty) Ltd is a licensed financial services provider. The information provided in the article is not advice, as defined in the FAIS Act.

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