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Study destroys the myth millennials are wasting their money

Tom Belger
·Finance and policy reporter
CARDIFF, UNITED KINGDOM - NOVEMBER 02: A plate of avocado on toast in a cafe on November 2, 2018 in Cardiff, United Kingdom. (Photo by Matthew Horwood/Getty Images)
Millennials have been accused of wasting money on avocadoes on toast. Photo: Matthew Horwood/Getty Images

Millennials in the UK have seen their spending power plummet while baby boomers have grown wealthier over the past two decades, according to a new report.

A study by the Resolution Foundation said British young people are now 7% poorer in real terms after housing costs than their counterparts were in 2001.

It said people aged 18 to 29 spent most of their spare cash on groceries, education and bills, while people aged 65 and over spent a higher share on hotels, culture, restaurants and recreation.

The findings suggest stereotypes of millennials being the most likely to waste money on eating and going out could be wide of the mark.

Two years ago an Australian millionaire made headlines worldwide by telling millennials to stop frittering away cash on “smashed avocado and coffee” if they wanted to get on the property ladder.

The ‘Intergenerational Audit’ by the think tank suggests young people’s incomes have been squeezed since the financial crisis, just as they face higher housing costs.

It suggests there is a “long road” ahead for younger people trying to get on the property ladder at rates similar to older generations.

The report also warns the increased costs of pensions, care, welfare and healthcare for the older generation, living longer with more complex conditions, will be a “major demographic headwind”

Younger working taxpayers will be contributing to the additional costs, estimated at an additional £36bn a year by 2030.

David Willetts, president of the Intergenerational Centre, said: “From frustrations about buying a first home to fears about the cost of care, Britain faces many intergenerational challenges. The big living standards gains that each generation used to enjoy over their predecessors have stalled.

But he added: “Welcome steps are being made, from stronger pay growth for young millennials to the success of auto-enrolment into pension saving.”