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.


Online Spending Forecast (in billions)
College Students Teens Kids
2003 $4.5 $1.7 $0.2
2004 $5.5 $2.6 $0.4
2005 $6.4 $3.6 $0.7
2006 $7.4 $4.8 $1.0
Source: Jupiter Research, October 2001

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.


Teen and Young Adult Media Exposure
Type Hours per Week
Internet (excluding email) 16.7
Watching TV 13.5
Listening to Radio 12
Talking on Phone 7.7
Reading (excluding school) 6
Source: Harris Interactive and Teenage Research Unlimited (TRU)

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