Millennials that grew up in boom-bust cycle more cautious in spending than their parents

Martin Martinez fixes his bike at the Bicycle Kitchen in Los Angeles. Many millennials have developed a penchant for thrift.
Martin Martinez fixes his bike at the Bicycle Kitchen in Los Angeles. Many millennials have developed a penchant for thrift.

Ringed by the posh shops of Los Angeles’ Beverly Center, Tim Ratliff said no — he didn’t have a credit card. He didn’t need one.

“I just hear so many horror stories about people being in debt,” said Mr. Ratliff, 21, who studies psychology at Ohio State University. “When you have a credit card, you feel like you have a lot of money when you don’t.”

Mr. Ratliff is like many young adults, emerging data show. His generation, dubbed millennials by academics and marketers, grew up during the boom and bust cycles of the U.S. economy over the last decade and a half — crises that appear to have reshaped their attitudes toward spending and debt.

Millennials, who range from teenagers to people in their early 30s, are more financially cautious than the stereotype of the spendthrift twenty-something, several studies suggest. Many embrace thrift.

Some experts say their habits echo those of another generation, those who came of age during the Great Depression and forged lifelong habits of scrimping and saving, along with a suspicion of financial risk.

“Both generations had a childhood memory of wealth and then saw that wealth yanked out from under them” in or around their teenage years, said Morley Winograd, who has co-written several books on the millennial generation.

Though the pain was much more severe during the Depression, “Both generations are very conservative spenders,” Mr. Winograd said.

During the economic downturn, while older households ran up credit-card debt, younger households whittled it down, a Pew Research Center analysis of federal data found earlier this year.

More young households had no credit-card debt in 2010 than was the case in 2001, the data show. Among those who did owe on their credit cards, the median amount fell from roughly $2,500 to less than $1,700.

Maria Garcia, 30, said she gave up her credit card seven years ago.

“The fees — they get you,” said Ms. Garcia, a mother studying Web development at Los Angeles Harbor College. Her attitude these days, she said, is, “If I can do without it, I’ll do without it.”

Other studies hint that Ms. Garcia is not alone in that attitude: Young adults were less likely to report using a credit card for everyday expenses than the average adult, a National Foundation for Credit Counseling survey found.

Another survey from the Corporate Executive Board, a business advisory company, found that millennials with credit-card debt feel worse about it than older adults do.

“They’re keenly aware that the decisions made by their parents, politically and economically, have put them behind the eight ball,” said Michael D’Antonio, co-author of Spend Shift, which draws upon an international opinion survey about values and spending. “This is the screwed generation — and I think they know it.”

Many young adults have forgone big purchases. Millennials buy fewer cars and own fewer homes, federal data show.

They cook from scratch more often than older adults, are more likely to try homemade beauty treatments, and are more apt to use coupons to find deals, the market research firm Information Resources Inc. found in a survey last year.

In recent years, Bureau of Labor Statistics data reveal, adults between the ages of 25 and 34 spent less annually on entertainment than those ages 65 to 74.

Even as they cut back on spending, millennials started saving for retirement earlier than older generations, according to studies by Merrill Edge, Fidelity, and TD Ameritrade Holding Corp.

“It’s not that we’re more pious about saving money,” said Nona Willis Aronowitz, a 28-year-old Pipeline fellow with the progressive Roosevelt Institute who writes about generational issues. “It’s more that we have no idea what the future looks like. We’re not sure if we’ll have our jobs in six months.”

Ms. Aronowitz added that many millennials who went to college are burdened by ballooning student loans, making them loath to load up more debt.

Yet despite their thinned wallets, young adults were more likely than any other group — including households making $90,000 or more — to say they were happy with their standard of living, a Gallup survey found two years ago.

In another Gallup survey last month, they were more likely than adults ages 30 to 64 to say that their financial situation was good or excellent, which nearly half of them asserted.

In some quarters, thrift has become cool, reflected in the do-it-yourself stylings of hipsters and economical new applications and Web sites.

“As a kid, if you had a patch on your jeans it wasn’t cool — people made fun of me,” said Jonaya Kemper, a 27-year-old preschool teacher who grows her own vegetables and sews her own sundresses. “Now they ask, ‘Can you teach me?’ ”

On a recent Monday night, Ms. Kemper was learning to adjust brakes at the Bicycle Kitchen, a Silver Lake nonprofit group that tends to battered bikes with spare parts and elbow grease.

Across the room, a friendly, tattooed volunteer showed a 13-year-old and her mother how to shorten the chain on a long-neglected bicycle.

Ms. Kemper was fixing up a bike handed off to her by a friend.

“Paying $600 or $700 for a bike — it’s ridiculous,” Ms. Kemper said. As for repairs, “If I can’t fix it myself, I won’t own it. I don’t own a car. I would want to know how to fix it myself.”

The Internet has provided more ways to save. Carless millennials can grab rides with ride-sharing services. Those short on cash can pick up a camping tent or a blender by logging onto NeighborGoods, a Los Angeles-based start-up that helps people borrow items from neighbors and friends.

“The recession made thrift cool,” said Micki Krimmel, the 35-year-old founder and chief executive of NeighborGoods, which has nearly 30,000 members of all ages.

In Los Angeles, twenty and thirty-somethings flock to classes to craft chandeliers out of Mason jars or salvage old clothes with a bit of sewing at the Classroom LA.

Experts caution that many in this generation may not be thrifty by choice.

Nearly 1 in 4 young adults surveyed by the National Foundation for Credit Counseling said they had applied for a credit card in the previous year; more than half were rejected. Fewer college students reported owning credit cards at all after a federal law made it tougher to issue them to consumers under 21, Sallie Mae and Ipsos found.

Others warn debt still could be trouble for strapped millennials. An earlier Ohio State University study that included roughly 300 young adults projected that while they owed less on credit cards, they repaid it so slowly that they could face far deeper debt than their parents and grandparents in the future.

Mr. Ratliff is wary of that risk. Maybe a credit card is in his future.

But the Ohio State student sees using one as “a last-resort kind of thing.”

“I don’t want to put myself in a situation of being crushed,” Mr. Ratliff said.