Friday 14 September 2018

Finance Fridays – Spending differences

We were looking at motoring penalties and fines for last week's Finance Fridays. This week we are talking about the differences in finances between older and younger generations and how they spend it.

Do you remember the advert encouraging men to spend a month's salary on an engagement ring for their potential wife-to-be? It was part of a campaign by diamond company De Beers to promote the buying of expensive jewellery. This followed their long running campaign which started in 1947 and ensured people that, 'A Diamond is Forever'. For many generations this came as standard practice. It's not surprising that insurance company Insure4Retirement, who specialise in policies for the over 50s, found that 73% of people who were quoted for a policy that included jewellery as part of the cover required had gems and precious metals worth over £5,000.

In contrast Millennials, defined as those born between the early 1980s and late 1990s, don't have the asset wealth as their older counterparts. This isn't just due to not having the same amount of time to accumulate such assets. Whilst home ownership was once seen a part of the next step in growing up and settling down now younger generations find they may be paying rent for the rest of their lives. With student debt and rising house prices the chance to get on the property ladder has become ever harder

With no bricks or mortar to call their own Millennials seem to have less need for material items. Music and films are streamed rather than buying CDs and DVDs. Books and magazines are read on phones and tablets without the need for paper. A popular path to follow is one set out by The Minimalists with their regular blog posts, podcasts, videos and talks.

Marriage rates have been in steady decline since the 1970s so fewer couples are no longer having the opportunity to give and receive expensive pieces of jewellery such as engagement and wedding rings. In the past consumers have been swayed into buying new pieces of jewellery through clever marketing campaigns. The creation and popularity of rings such as eternity and trilogy was down to advertising but those young consumers are no longer the target group.

Instead spending money on experiences comes before lifetime commitments. Whilst Generation X started the popularity of gap year travelling but this has been expanded further for those younger adventurers with no ties. Far flung destinations such as Bali and Thailand now feature highly on the travel list. It's not just the younger population that likes to go travelling. With perhaps a house full of stuff the older age group of 65 to 74 are now spending nearly a fifth (18%) of their total spending on recreation and culture according to the Office for National Statistics (ONS). With time on their hands and money in their pockets they have the means to travel and enjoy themselves. Unlike the younger generation they look towards package holidays rather tailored trips or spontaneous journeys. Much of this has been made possible by the easy availability of travel insurance for those people who are older and who have medical conditions.

Have you noticed the changes in generational spending over the years? 

This is a collaborative post.

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Finance Fridays

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