The ongoing inflation rate has increased since 2022, leaving Americans of all ages feeling scarce cash. Although inflation has significantly alleviated from its peak of 9.1% in June 2022, it has reached 3% for the first time in the last six months.
Since deflation is difficult to achieve, prices continue to fall even if inflation cools down, making it difficult for consumers to make ends meet and maintain budgets.
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While the skyrocketing consumer prices affect the population of all ages, millennials, in particular, have seized on the financial obligation to balance student loans, trying to buy homes in a challenging housing market, and an unpredictable job market , employment opportunities provide limited upward liquidity.
Fidelity recently released a 2025 resolution study, and the results show that the trend of how millennials manage their financial situation to survive challenging times is surprising.
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Inflation is harder to hit millennial wallets than other age groups
Inflation makes food, housing and utilities the hardest, making it much more expensive to cover everyday necessities. Although inflation hit 3% in January 2025, prices remained high.
According to a recent financial statistics survey, inflation has resulted in more than 70% of millennials and Gen Z savings.
The Minneapolis Federal Reserve Bank found that when inflation stabilizes, it affects all ages relatively evenly. But when inflation surged in 2022, it hit young Americans, especially younger Americans, and the inflation rate among older people is about 2.5% lower than the average.
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A “virility trend” has emerged among young consumers. They aim to cut their discretionary spending, such as dining and social activities, focusing on achieving short- and long-term financial goals.
Millennials are balancing consumer price rises, overwhelming student loan debt and the perfect storm to navigate the unpredictable and expensive housing market. Millennial student loan debt accounts for 43% of all outstanding student loans, far exceeding Gen Z (28%) and Gen X (21%).
But millennials are also the most likely age group, with a financial plan to achieve their goals in 2025, but they are more likely to focus on short-term savings goals, such as paying off debt or building emergency funds.
The easiest way to achieve short-term monetary goals is to cut spending. Although younger generations of older paying peers face a challenging economy, Fidelity has shared some tips that may help manage daily expenses.
How to cut spending and increase savings without missing out
While essential goods such as food and housing grow and exceed wage growth, reducing unnecessary spending can hit price increases and free up money in your monthly budget.
The easiest way to eliminate extra expenses is to determine the biggest part of the expenses – clothing every day, dining or even buying a quick lunch – and reduce costs per week.
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Send the money saved directly to your financial goals – repaying debts or increasing savings or investment accounts – will help reduce the urge to spend it on something else.
Fidelity also found that younger generations are prone to fear of missing out on (FOMO) spending. Setting clear and measurable long-term and short-term financial goals can help reduce thoughtless spending.
Financial professionals also point out that allowing a small indulgence or occasional splurge can help you stay on track without feeling like you’re missing out on everything.
Finally, if you are determined to make a purchase, it is best to wait a week or two. If you still invest in items or experiences that fit your budget, it’s worth the tradeoff.
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