The elevated inflation that has persisted since 2022 has made Americans of all ages feel cash-strapped. Though inflation eased significantly from its peak of 9.1% in June 2022, it recently reached 3% for the first time in over six months.
Since deflation is very difficult to achieve, heightened prices linger even when inflation cools, making it difficult for consumers to make ends meet and stay within their budget.
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While skyrocketing consumer prices have impacted all age demographics, millennials, in particular, are caught balancing financial obligations from student loans, trying to buy a home in a challenging housing market, and an unpredictable job market with jobs providing limited upward mobility.
Fidelity recently released its 2025 Resolutions Study, and the results indicate a surprising trend in how millennials manage their finances to survive challenging times.
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Inflation is hitting Millennial wallets harder than other age groups
Inflation has hit food, housing, and utilities the hardest, making it far more expensive to cover the cost of everyday necessities. Though the inflation rate hit 3% in January 2025, the high prices have remained.
According to a recent Bankrate survey, inflation has caused over 70% of Millennials and Gen Z to save less.
The Federal Reserve Bank of Minneapolis found that when inflation is stable, it impacts all age groups relatively evenly. However, when inflation surged in 2022, it hit younger Americans especially hard, while older Americans experienced an inflation rate about 2.5% lower than the average.
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The “no-spend trend” has emerged among younger consumers. They aim to cut their discretionary spending, such as meals out and social events, to focus on meeting short-term and long-term financial goals.
Millennials are caught balancing the perfect storm of surging consumer prices, overwhelming student loan debt, and navigating an unpredictable and expensive housing market. Millennial student loan debt accounts for 43% of all outstanding student loans, far more than Gen Z (28%) and Gen X (21%).
However, millennials are also the most likely age group to have a financial plan to meet their goals in 2025, but they are more likely to focus on short-term savings goals, like paying off debt or building an emergency fund.
The easiest way to reach short-term money goals is to cut spending. While younger generations face a challenging economy on lower salaries than their older counterparts, Fidelity has shared some no-spend tricks that may help manage day-to-day expenses.
How to cut expenses and increase savings without missing out
While necessities like food and housing have risen and outpaced wage growth, cutting down on non-essential spending can combat rising prices and free up money in your monthly budget.
The easiest way to eliminate extra spending is to identify the largest portion of your spending — clothing, dining out, or even purchasing a quick lunch every day — and target a weekly cost reduction.
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Sending the money saved directly to your financial goal — paying down debt or adding to a savings or investment account — will help reduce the urge to spend it on something else.
Fidelity also found that younger generations are prone to fear of missing out (FOMO) spending. Setting clear and measurable long-term and short-term financial goals can help cut down thoughtless spending.
Financial professionals also note that allowing small indulgences or occasional splurges can help you stay on track without feeling like you’re missing out on everything.
Finally, if you’re adamant about making a purchase, it’s best to wait a week or two. If you are still just as invested in the item or experience and it can fit into your budget, then it’s likely worth the tradeoff.
Related: Veteran fund manager issues dire S&P 500 warning for 2025
