The Covid-19 pandemic and the ensuing lockdowns have changed our lives in ways more than one. Most importantly, it has changed our purchasing behaviour and how we make our financial decisions. A poll conducted by a shopping platform found that 60% of millennials have cut down their spending on movies, clothes and entertainment, but increased their spending on health care, wellness and groceries. Another report by a financial services company reveals that millennials and Gen Z are spending at 125% of their pre-Covid spending levels from 2019. Yes, the lockdown and ambiguity have forced many youngsters to pause and evaluate their lifestyle and spending habits. While some who were spendthrift earlier are suddenly becoming more frugal while some are splurging on food, experiences, health etc more than ever before.
Boredom, anxiety and uncertainty lead to increased spending
For most millenials, life turned topsy-turvy due to the pandemic and this is partially because it’s unclear when what will occur. They realised that life is not only fragile but also quite unpredictable. Moreover, with nowhere to go and nothing very exciting to look forward to, shopping worked as a way of buying a dose of happiness amid the pandemic.
“In the past one year, I have bought a laptop and a phone among countless other things. The pandemic made me look at things differently and although I have managed to keep a chunk of my earnings as savings, I have spent quite a lot of it too. While most of us are going through a major crisis for more than a year now, splurging on materialistic things definitely seems like a way of giving yourself some joy,” says Shalini Mehra, a working professional based out of Delhi.
Entrepreneur and author Shruti Kaushik partially blames it on the “empathy-based marketing” that many companies have been successful in implementing during the pandemic. “The pandemic-induced lockdowns have left an average shopper feeling suffocated. This has led to more emotion-driven buying rather than relevant buying.” Kaushik further adds that lockdown-related boredom, hysteria, anxiety, uncertainty and the convenience of online shopping from the comfort of one’s home/office are some of the major reasons behind increased spending among millenials.
Millenials spend more on health, beauty, branding, online courses
During the coronavirus pandemic, millennial spending habits have changed to adapt to economic constraints and recommendations by health experts. Fitness equipment for at-home gyms, bicycles, loungewear and workout wear, skincare products, exotic foods and ingredients are some of the things millenials are spending their hard-earned money on.
Arachana Iyer, a working professional from Mumbai says, “Personally speaking, I notice a huge change in my buying patterns over the last one year as compared to the pre-Covid times. I have indulged a lot more, be it clothes, accessories or even electronic products. The monotony of WFH and life in general made me want to shop. It served as a much-needed distraction from the current situation. I also feel that the need to splurge will stop once things go back to normal.”
Apart from materialistic things, several millenials are also spending on creating a strong presence for their online businesses. “Lately, I have seen millenials spending a part of their income wisely on their businesses and online brand presence apart from their mental and physical health. Clothes and accessories could be ongoing purchases, but many millennials are also exploring investment options to increase their brand presence through social media,” says Kaushik.
Covid-19 has changed the thought process in the young. “They now perceive health as a serious investment; and that includes physical as well as mental well-being. Digital subscriptions of services and entertainment are also fast becoming a necessity, so a decent portion is being spent there,” says Tushar Bopche, an expert in finance. Bopche also feels that millennials are spending much more on present comforts and future securities and this can be a welcome change if managed well.
Find a balance between saving, spending and investing
As we are living amid the pandemic, one must make their spending choices wisely by re-evaluating their goals and budget and prioritising expenses. “The pandemic-induced anxiety is real and that could lead to over spending or spending on unnecessary things. While it’s great to allocate a certain amount to ‘pleasurable’ spending; on holidays, clothing and luxury items, it is equally important to keep aside a decent amount of savings in case there is another lockdown in the future,” suggests Kripalani.
Millennials between the years 1982 and 1996 as well as Gen Zers between 1997 and 2012 are highly connected to technology and the internet and this gives them unlimited options when it comes to what they must spend on or invest in.
Kaushik suggests investing in yourself rather than investing in expensive things. “Whether it’s taking up a new course or investing in marketing or branding campaigns for your company, try and invest some money in sharpening your skills during this time in order to have a strong future for yourself,” says Kaushik. In case you have some extra money on hand, consider investing it rather than spending it and enjoy the fruits of your patience. “A frank discussion with your loved ones about your investment plan is a great idea. One can discuss and take suggestions from their partners or parents about investment options,” says Bopche.
“Clothes are the biggest investment amongst ‘Gen Z’ upto the twenty-somethings, who are also the most enthusiastic about spending time with people outside of their house once they get vaccinated. As for the millennials, travel is said to become the most popular funnel of post-covid spending, as there is a lot of pent-up energy still lurking and an appetite for connecting with loved ones again”
– Lifestyle Coach Pamela Puja Kirpalani.
- Top expenses of millenials include groceries (40%), alcohol (13%), restaurants (8%), and health and beauty (3%).
- Half of millennials are spending at restaurants through takeout and delivery one to two days a week rather than eating in-house.
- 30% of millennials are spending more online than previously to avoid shopping in person.
- When it comes to the purchase of brands and products, more than half of millennials and gen Z audiences prefer the purchase of local brands as opposed to international ones.
- Driven by a desire for self-care and relaxation, 32% millenials are planning to increase travel spending in 2021