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Millennials spend more on necessities than older generations

A millennial shopper at the express checkout at 365 by Whole Foods Market.
Patrick T. Fallon | Bloomberg | Getty Images
A millennial shopper at the express checkout at 365 by Whole Foods Market.

There's plenty of speculation out there about why Millennials aren't buying homes, investing in the stock market or even buying diamonds.

But a new report found that Millennials spend significantly more on necessities like groceries and gas than older generations.

On average, people between the ages of 18 and 36 spend $2,300 more per year on groceries, gas, restaurants, and cellphone bills than those who are 37 and older, according to a study from Bankrate.com.

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On the other hand, Millennials spend $1,130 less on travel and television than their elders.

Although Millennials have far less spending power than other age groups, this data makes sense considering the lifestyle choices of the nation's largest generation.

"Millennials aren't all about going out to brunch every Sunday and jetting off to all these places," said Bankrate.com credit card analyst Robin Saks Frankel.

"It's mostly Millennials, particularly the older ones, who tend to be settling down and having families," she continued.

Older Millennials with young children typically do more driving and spend more at the grocery store, according to Frankel, while younger Millennials usually have less financial obligations and are thus able to spend more.

"Millennials have this more active lifestyle. They're at home less, they're always on the go," said David Weliver, founding editor of Money Under 30, a personal finance website for young adults.

"I've always noticed the spending on going-out related expenses. Gas would certainly fit into that, as well as spending on dining and going out to bars," he said.

Millennials might spend more on restaurants and take out because they eat out five times a week, as another Bankrate.com study found.

Higher phone bills could be the result of their love of smartphones. Nearly 98% of Millennials own smartphones, according to a 2016 Nielsen study. The study found that the percentage of smartphone owners is dramatically lower among older age groups.

"Millennials are more likely to cut the cord and stop spending on big cable packages," said Weliver. By ditching costly cable subscriptions in favor of streaming services like Netflix and Hulu — or piggybacking on family accounts — Millennials can bring down their television costs.

Weliver noted that while older people spend more on travel, saving up for a big trip is often a major financial goal for Millennials.

All this spending actually presents an opportunity for saving. Frankel recommends that young people take a close look at their credit card plan to maximize their rewards.

"With the effective use of a standard 2% cash back card, the average Millennial could save more than $400 per year on things they are buying anyway." she said. "That number can rise even higher by matching the right card to specific spending habits."