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Millennial vs. boomer budgets: How spending has changed for young adults in the last 30 years

Madison Hoff   

Millennial vs. boomer budgets: How spending has changed for young adults in the last 30 years
  • Business Insider looked at how young adults aged 25 to 34 spent their money in 1989 compared to 2022.
  • The findings show us how prices and habits changed since boomers were young adults.

In 1989, you could see "Batman" and "When Harry Met Sally" in the movie theater. People wore brightly colored fashion and bought Nintendo Game Boy consoles.

In 2022, many people were still working from home amid the pandemic's disruptions to the workplace. They were wearing a lot of athleisure, and perhaps venturing back to movie theaters — this time to see "The Batman."

In the intervening 33 years, how young adults spent their money changed dramatically. Business Insider analyzed spending data for young adults aged 25 to 34 in 1989 — which would cover part of the baby boomer generation — and in 2022 — which would largely be people of the millennial generation — on various kinds of food, housing, education, and more.

Young adults in 1989 were spending more — when adjusted for inflation — on beef, alcohol, and homes they owned than this age group decades later in 2022.

Here's how expenditures looked between the two:

For this analysis, Business Insider compared average annual expenditures for households that were headed by 25- to 34-year-olds in 2022 to similar 1989 households. We used data from the Consumer Expenditure Surveys program published by the Bureau of Labor Statistics, or BLS. BI calculated inflation-adjusted figures for 1989 using consumer price index data to put those costs into 2022 dollars.

We wanted to examine how spending for baby boomers when they were young adults compared to millennials who were around the same age in 2022.

The differences in average spending between young adults in 1989 and 2022 could be due to changes in prices or shifting habits.

Take a look at rented dwellings, for example. The consumer price index data for rent of primary residence suggests a lot of the increase between 1989 and 2022 is because of price increases but can also be explained by young adults being more likely to rent apartments.

Millennials and Gen Zers also have different habits and living situations than their parents' generations. For example, millennials are finding it hard to become homeowners in the US. Young adults who drink alcohol are consuming fewer alcoholic drinks on average than older peers in 2021-2023 or young adults back in 2001-2003, and diets have changed.

Taken together, the data offers a window into how young adults' budgets have changed over the last three decades, either due to rising costs for things like healthcare, seafood, fresh fruits, housing, and used vehicles, or due to changing habits and lifestyles. Below is a closer look at what's going on.

Millennials are spending a lot more on healthcare and rented housing

Health insurance spending stands out between the average young adult in 1989 versus in 2022. After adjusting for inflation, the average young adult spent $755 in 1989. In 2022, it was over 200% higher.

A Bureau of Labor Statistics report from November 2023 by Grace Hill looked at the effects of the pandemic on healthcare spending overall and broken down by age groups and other groupings.

"The only age groups to increase overall healthcare spending in 2020 were the 25–34- and 45–54-years age groups," the report stated. "These age groups had the largest increases in health insurance expenditures: the largest component in healthcare spending."

Additionally, young adults in 2022 were spending more on rent and related expenses than was the case in 1989. Based on average data, young adults were spending roughly 60% more on apartments and other rented housing.

Millennials are spending less on used vehicles and mortgage interest

The average young adult in 2022 spent more on gas and motor oil than this group in 1989. However, they weren't spending as much on used cars and trucks.

Data not adjusted for inflation shows that used cars and trucks expenditures increased more than the CPI for used cars and trucks between 1989 and 2022.

A December BLS report about consumer expenditures said households in general, not just among young adults, spent more in 2022 on rent and related expenses and owned homes than in 2021.

"High home prices, high mortgage lending rates, and particularly high rental rates for apartments placed upward pressure on spending over the year," the BLS report said. "Mortgage interest and principal payments are essential expenditures for owned dwellings, and a rapidly changing mortgage environment sent an exogenous shock through the market."

The report added that the high 30-year fixed rate mortgage in 2022 led to "consumers on the margin out of owned dwellings and into the rental market."

While BLS doesn't directly track price changes for owned housing, it approximates them with a measure of owners' equivalent rent of residences, which is up over 160% between 1989 and 2022. Meanwhile, young adult spending for owned dwellings was up over 120% before adjusting 1989 expenditures for inflation.

Young adults in 2022 spent more money on fresh fruits, vegetables, and seafood

Young adults in 1989 were spending less on fresh fruits and vegetables — as well as processed vegetables — than those in this age range decades later. The average young adult in 2022 spent 71% more on fresh fruits than their counterparts in 1989. Plus, the average young adult in 2022 spent 22% more on fish and seafood and 4% more on poultry.

While not the exact years we looked at for our analysis, an analysis from the Pew Research Center shows how food consumption has changed between 1970 and 2014 including a big increase in chicken and cheese per year.

We can also look at consumer price index data to see how inflation impacted food spending. Before adjusting 1989 data for inflation, young adults in 2022 spent 304% more on fresh fruits than young adults in 1989. Over that period, prices for fresh fruits based on CPI were up by nearly 170%, meaning that while part of the change in spending between the two years can be explained by price increases, young adults were also eating a lot more fresh fruit in 2022 than in 1989.

In 2022, young adults spent less on alcohol, beef, and dairy products

Average annual spending data shows that the average young adult in 2022 spent almost 40% less on beef than the average young adult in 1989. The average young adult also spent around 55% less on fresh milk and cream. The Pew Research Center report mentioned earlier also showed people were eating a lot less beef in 2014 than in 1970. The same was true for drinking milk.

Based on our analysis, the average young adult in 2022 was spending more on nonalcoholic beverages and less on alcoholic beverages than the average young adult in 1989. A Gallup post shows alcoholic beverage drinkers who were between 18 and 34 years old for 2021-2023, which would also include Gen Z, had an average of 3.6 alcoholic drinks in the past seven days. For 2001-2003, the average consumption was 5.2 alcoholic drinks among drinkers aged 18 to 34.

Our analysis shows young adults weren't spending as much on cereals and cereal products, which was defined as including "ready-to-eat and cooked cereals, pasta, flour, prepared flour mixes, and other cereal products such as cornmeal, corn starch, and rice," in 2022 as young adults in 1989. Based on reporting from multiple outlets, cereal's popularity has fallen while breakfast sandwiches, bars, and other items that are easy to take with you are now favorable.

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