Millennials -- the so-called "spoiled" generation, born with silver spoons rather than pacifiers -- aren't as foolish with tax refund money as you probably suspect. While it's tempting to picture Gen-Y-ers jumping on the next flight to Vegas and partying with that extra few thousand returned from the government, shockingly, they're not. Millennials don't cave to impulse spending as easily as you may think, naturally hindering splurging with an inherent desire for more, and this year are actually investing tax refund money. But, of course, this investing is in an "alternative" fashion.
From an insider perspective, I'll admit, initially it's hard to not splurge the money. You're young, you're likely single without dependents, so carefree is your middle name. And you basically get this free (although, yes, I realize it's technically already my money) lump sum of cash deposited into your checking account, amounts of which averaged around $3,000 this year.
With an extra few thousand sitting in my account, of course I wanted take an expensive stroll down Broadway in Soho. Or take a trip. Or buy every other health and beauty loot deal on Lifebooker. Or simply go a month without checking my bank account every Tuesday morning with a knot in my stomach. But, low and behold, I restrained myself, and so do most Millennials.
The Millennial Shopper is the Mass Maximizer
The consumer characteristic outsiders overlook about Millennials, is that when it comes to spending, we are a generation of maximizers, and it's both a blessing and a curse. Sure, we can identify what we like, online, on our phones and in store, but liking a product simply isn't enough to make us buy it.
First of all, we want the very best deal on it. And some type of gamification incentive that makes the purchase feel rewarding. And the fastest delivery option. And free shipping -- of course. And, while we're at it (and since we're alpha-influencers), the option to customize it. And eventually we think, "But, wait, now that an hour has passed, do I really want this in the first place? Maybe there's something better out there... "
It takes so long to find all the aspects of an item we want, that by the time we do, we'll often just forfeit the need to buy it at all -- yes, the epitome of counterproductive.
Millennial Entitlement is a Splurge-Deterrent
The dreaded entitlement Millennials feel, which usually manifests as arrogance, or superiority without merit, is actually an inherent splurge-deterrent. Like the dieter with a sweet tooth who spends 20 minutes picking a flavor before indulging in a chocolate at which time, right before, the urge suddenly passes, often by the time Millennials finally find an item and place to buy that meets all the purchase aspects that we feel we deserve, either the craving for the item has passed or our attention spans are just spent.
The never-satisfied, non-spending trend has even spanned to online commerce, where many Millennials treat online shopping the same way showroomers typically treat in-store shopping: continually on the hunt for the "better" product, price, incentive, what have you. This extensive, somewhat dysfunctional cycle of a typical Millennial consumer has paved the way for unprecedented, visibly soaring rates of digital native advertising and explains why lucrative brands are becoming products in and of themselves.
Here's How Millennials Really "Invest" Tax Refunds
Nowadays, instead of splurging, most Millennials, 67 percent in fact, are saving or investing tax refund money. Saving is one thing, but "investing" in a loose term. Again acting as mass maximizers, Millennials strive to find somewhat unconventional outlets and methods to "invest" tax money and most are investments in themselves:
Goodbye life insurance; Millennials invest in health.
Is there such a thing as being too proactive? Millennials may put off the future, but we're opting for a health-conscious lifestyle right now. Instead of contributing to a "death" fund, Millennials are opting to invest in tech to live longer, healthier lives.
Goodbye IRA; Millennials invest in retiring at the end of each day.
Rather than wait until 65 to sit back and spend, Millennials are investing in the things that help them relax each day. As a generation who grew up with robots before computers, automation is hip right now in the millennial world, and so are automated products that do the work for you, such as iRobot Vacuums.
Goodbye financial advisor; Millennials invest in personal accountability.
It's not all instant gratification, we also think about our future. Millennials are investing in a new type of money management with online, cloud-based personal finance software.
Goodbye insurance policy; Millennials cover themselves in different ways.
Different and digital ways, that is. Wearable tech is the hot new commodity hardworking Millennials can't get enough of. It's not just FitBits; it's straight-from-the-trade-show-debuted wearable technologies that actually provide some useful benefits.
Goodbye savings account; Millennials invest in saving more now.
Why spend more money than need be? As opposed to saving money for an unpredictable future, Millennials are going green and choosing to invest in gadgets that help them save more money now. Plus, energy-saving is trendy, so we're willing to pay more for "smart" lightbulbs and nest thermostats.
Goodbye home improvements; Millennials invest in heart improvements.
(Image source: AskMen)
Goodbye charitable donations; Millennials invest in giving a better version of themselves to the world.
We were taught we must help ourselves before helping others, so this shouldn't come as any surprise. Millennials invest in improving who they are first and foremost before taking on external challenges, and there's plenty of tech out there, such as the Lumo Lift, to help us do just that.
You know you can't afford it. You might as well be burning your money.
A good credit history is essential to a successful financial future. Landlords, lenders, insurers and even employers use it as a way to judge you.
Yes, you want to make sure that you establish a credit history, but that does not mean taking out every credit card imaginable. Taking our high-interest cards with large balances can lower your credit score and lead to overspending.
If you want to increase your credibility in the eyes of lenders, paying bills on time is essential. Also, it is a good way to avoid unnecessary late fees!
A graduate degree is not only a financial investment, but a time investment. Before embarking on a post-graduate degree, it is important to do a cost-benefit analysis to ensure the diploma you are seeking is right for you.
Going after a degree at a time when you have to take out enormous student loans just to graduate puts you at a significant financial disadvantage once you finish school.
It is called your emergency stash for a reason! And no, a flash sale at Nordstrom Rack is not an emergency.
Be honest, when was the last time you actually had a full fridge? Despite what you keep telling yourself about how expensive groceries are getting, the bottom line is that eating at home saves money, especially if you are single.
We understand that retirement could not feel further way when you are in your 20s. But it is never too early to start saving. Need an incentive? When you are young, you have the advantage of giving your investments much more time to accrue interest and grow.
As much fun as it is to get a tax return at the end of the year from the IRS, you only get a big refund when your employer is withholding too much money from your paycheck during the year. If that's the case for you, adjusting your withholdings may be a good idea.
Most budget gurus suggest that your rent should be no more than 30 percent of your monthly income. If you are anything like us, you are paying much more than that.
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