You are here: Home - Money Tips -

Young people are spending less than they did at turn of the century

Written by: Emma Lunn
Young people are spending 7 per cent less on non-housing items than they were back in 2001, according to the Resolution Foundation.

The think tank’s intergenerational audit has dubbed young people’s lack of spending power as the ‘consumption crunch’.

The audit, supported by the Nuffield Foundation, examines the generational living standards issues facing Britain. These issues include the labour market, housing market, state support and private pension savings, and assesses whether the 20th century norm of each generation enjoying considerably higher living standards than their predecessors still holds true.

The report found young people’s consumption – which reflects both their spending power and spending choices – has taken a big hit. People aged 18 to 29 today are spending £380 a week on non-housing items – 7 per cent less in real terms than people of the same age were at the turn of the century (2001-02).

While consumption for this group has fallen, it has increased by 11 per cent for those aged 50 to 64 (who are spending £460 a week), and by 37 per cent for those aged 65+ (spending £390 a week).

Millennials having less fun

The report also found young people are devoting a smaller share of their spending to ‘fun’  – such as recreation, restaurants, hotels and culture – which is down 3 percentage points to £100 a week. In contrast, people aged 65+ are devoting a greater share of spending on these items (up 4 percentage points to £110 a week).

Younger millennials have experienced stronger pay growth than any other age group since 2016, with the pay of 18 to 29-year-olds rising by 2.4 per cent. But the hangover of the crisis remains for older millennials. In their early 30s, the typical pay of someone born between 1981 and 1985 was 3 per cent lower than someone born 10 years earlier.

The audit found home ownership among young families has risen over the past two years, following a 66 per cent decline between 1989 and 2016. But other challenges have emerged – such as the 32 per cent increase since the mid-1990s in young people living in overcrowded accommodation.

Gender wealth gap

The report also revealed a huge gender wealth gap for baby boomers, with women in their late 60s having just over half the wealth of their male counterparts.

David Willetts, president of the Intergenerational Centre, said: “From frustrations about buying a first home to fears about the cost of care, Britain faces many intergenerational challenges. The big living standards gains that each generation used to enjoy over their predecessors have stalled.

“But while Britain’s intergenerational challenges are big, they are not insurmountable. Welcome steps are already being made – from stronger pay growth for young millennials to the success of auto-enrolment into pension saving.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Everything you wanted to know about ISAs…but were afraid to ask

The new tax year is less than a fortnight away and for ISA savers or investors, it’s hugely important. If yo...

Your right to a refund if travel is affected by train strikes

There have been a wave of train strikes in the past six months, and for anyone travelling today Friday 3 Febru...

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week