Americans’ spending patterns show that many are prioritizing short-term needs in an inflated market. A new study by First Merchants Bank only further proves this point.
The new research by the bank finds that Americans tend to spend more on services that impact their day-to-day life, including streaming services, food delivery, and hobbies, over long-term outlooks like retirement. According to the study, 47% of respondents listed streaming as a top spending priority, compared to 26% who prioritize retirement savings.
Millennials and Gen Xers—many whom report feeling the impacts of competing financial concerns—were among the likeliest out of all age cohorts to spend on streaming, with 49% of Millennials listing it as a key item in their budgeting, followed closely by Gen Xers at 47%. On the other hand, 21% of Millennials and 27% of Gen Xers say they prioritize saving for retirement.
Different generations also tend to overspend on these items, found First Merchants Bank. The study’s findings show that 15% of Gen Z and 13% of Millennials overspend on services like Netflix, Amazon Prime, Disney+, and Hulu, compared to 7% of Gen X and 6% of Baby Boomers.
Others are spending more on food delivery services, which have doubled since the pandemic in 2020. A report by McKinsey found that the U.S. food delivery market is now valued at $150 billion, having more than tripled since 2017.
As grocery prices continue to rise, more individuals are choosing to order food through services like DoorDash and Grubhub, which could further incentivize patrons with coupon codes and discounts on takeout orders. According to the research, 34% of Gen Zers report overspending their monthly budget on takeout, followed by 31% of Millennials and 29% of Gen Xers.
It isn’t just streaming and delivery services that individuals are overspending on—over half of U.S. adults spend over their budget each month due to economic challenges and financial uncertainty, First Merchants report states. The survey found that 24% of Millennials and 19% of Gen Zers are not confident about budgeting or managing cash flow, compared to 11% of Boomers.
Utilizing financial assistance tools that cater to budgeting needs could help individuals reach their short-term and long-term savings and spending goals, adds Dahna Sanders, vice president and senior workplace banking representative at First Merchants Bank.
“With the correct tools you can balance spending money on things which bring enjoyment and investing wisely in your future,” she said. “Using budget building tools and spending alerts can help create budgets and stick to them. Financial Calculators, or interest-bearing accounts like high-yield Money Market Accounts can help maximize your savings for the future.”
Additional findings from the survey can be found here.
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Public Sector Workers Lack Confidence in Retirement Savings
Half of Retirees Stress Over Spending Retirement Savings
Investors Proactively Managing Retirement Savings
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
