The Kids Are Alright With Spending

The demographic “Generation Y” can be segmented into three
distinct age groups, with a combined spending power of $172
billion per year, according to research by Harris
Interactive.

This group of 8-to-21-year-olds represents 57 million
Americans who earn roughly $211 billion per year, and they
spend all but $39 billion of it. “This shows that this age
group has been willing to forgo savings in order to keep their
spending levels consistent,” said John Geraci, vice president
of youth research at Harris Interactive.

Generation Y puts 62 percent of their income into savings
at some point, but only 19 percent of their total income ends
up in savings in the long term, Geraci explained. “On average,
young people carry less than $30 with them, so they need to
constantly connect to their income source or savings to buy
things.”

Geraci notes that this generation’s influence on the
consumer economy is immense, saying, “Generation Y.s needs and
opinions drive many adult purchase decisions, and they,
literally, represent the future market for most consumer
brands.”

Harris Interactive found Generation Y to be composed of
three subsets:

• Pre-teens (ages 8-12), who spend at a rate of
  $19.1 billion annually, or $946 per capita
  
• Teens (ages 13-19), who spend at a rate of $94.7
  billion annually, or $3,309 per capita
  
• Young adults (ages 20-21), who spend at a rate of
  $61.3 billion annually, or $7,389 per capita

Where is all this disposable income coming from? Not
surprisingly, 87 percent of income for children under age 13
years is parent-supplied, compared to 37 percent of teens’
income and 7 percent of young adults’ income, with teens and
young adults relying mostly on paid jobs.

Also known as “Generation Wired,” the June 2003 Harris
study of nearly 3,500 participants found that 15 percent of
youth spending is done online, and boys remain more
comfortable with e-commerce, as they spend 1.7 times as much
as girls do online. Jupiter Research (a
unit of this site’s corporate parent) expects total online
spending for Gen Y to exceed $13 billion by 2006.

A joint Yahoo! Inc. and
Carat North America
study of 2,618 respondents, aged 13-24, in June 2003, found
that on a typical day, a young person is faced with a universe
full of media which includes 200+ cable television networks,
5,500 consumer magazine titles, 10,500 radio stations, 30
million+ websites, and 122,000 newly published books.