Younger Households Taking Lead on Saving Over Spending

Spending and saving habits don’t necessarily improve with age, although younger households seem to be putting a greater priority on the latter, according to investor surveys conducted by Spectrem Group.

In a first financial quarter wealth level study of households with a net worth between $100,000 and $1 million (not including primary residence), 61 percent said they considered themselves “savers” vs. “spenders.” Respondents under the age of 40, though, were the least likely to label themselves as such. Fifty-one percent said they considered themselves savers compared with 65 percent of baby boomers between the ages of 55-64.

What a difference a prolonged economic downturn makes. In a survey conducted last month, respondents under the age of 40 were most likely to say that stock market volatility had made them more pro-active on saving more and cutting back on household spending. Nearly 68 percent said that they were now more selective shoppers and were being more diligent in seeking out the best deals.

Just under half (49.8 percent) reported using products longer and being more selective on when to upgrade or replace certain products.

The youngest households are taking the lead in purchasing less expensive products. Nearly 43 percent said they are making an effort to do this, compared to just over 34 percent of those between 41-60. Forty-four percent also said they were cutting back on non-essential, or luxury, items such as clothes and technology, compared with 40.3 percent of those between the ages of 41-60.

Reducing spending is also a high priority for boomers, who are equally tenacious about selective shopping and looking for deals (67.7 percent) as well getting the most use out of their products (54.8 percent).

Seniors over the age of 60, surprisingly, were the least likely to adopt smart shopping strategies. Just over 23 percent of these investors said they had done none of the above, compared with 13.7 percent of those under 40.

This heightened appreciation for saving vs. spending may account for younger investors being more optimistic about their financial futures. In a survey conducted in late September of last year, 55.1 percent of those under 40 said they will be better off this year, compared with 39 percent of those between 41-50 and just 26.9 percent of those over 60.