The ‘Bank of Mom and Dad’ Is Stronger Than You Think

Millennials aren't sloshing money into traditional spending categories—and marketers are beginning to get nervous

Millennial shoppers are more fiction than reality.

The people who dedicate their professional lives to answering the question, “How do I separate American consumers from their cash?” are still trying to figure out how to pry money from Millennials. As Business Insider reports, “[Their] spending habits continue to fascinate—and frustrate—retailers as 20- and 30-somethings defy the consumption patterns that previous generations followed for years. One major difference: Millennials are far less likely to buy something because it’s convenient, something many companies capitalize on. Rather, they’re focusing on value.”

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“Value” in this case does not necessarily map to getting the most out of your money.” Nielsen Research found that the most desirable spending demographic defines value as something that enhances their time (i.e the experience premium) or gives back to society. These are a lot harder to scale than “we’ve rejiggered the t-shirt-making robot to make more shirts per hour, so now we can offer them for $2 less per unit.”

So what? Baby boomers are aging out of their prime consumption years, Millennials aren’t sloshing money into traditional spending categories, and marketers are beginning to get nervous about their long-term prospects.

Who cares? Industries that used to rely on consumerist rites-of-passage to guarantee a steady flow of revenue.

At a party once, I chatted with an acquaintance who had worked as a consultant with Crayola, and he told me that the most fascinating insight he had from his experience with the company was how they tied their sales forecasts to the birth records of the Social Security Administration. This way, the company could anticipate fluctuations in the birth rate and scale production up or down, as they had collected enough data to know when families reach Peak Crayon.

I don’t know if this is still true, and I’d love to know how they’re rolling the adult coloring-book trend into their sales projections, since that hobby is a lot less ubiquitous to a generational cohort than coloring in grade school is. But the point remains: Companies can and do take a look at generational cohorts to estimate the size of a future customer base. What they may or may not anticipate are the factors that render their product irrelevant to a projected audience.

Furniture is a perfect example of this. People used to buy furniture when they bought a house. Adults under the age of 35 are not buying houses like they used to. How can they? The median annual income for adults under age 27 is approximately $25,000; it rises to $8,000 for adults between 27 and 35. And the average student loan debt for these same adults is approximately $37,000. Depending on what kind of loans they have, young adults could be paying their lenders anywhere from $200 to $450 a month. Try making those payments when you’re netting approximately $750 per paycheck after taxes. Are you really going to drop $1,200 on a Peggy couch, much less assume the kind of mortgage required for a U.S. median-priced house of $315,000?

Yet, this “debt-saddled young adults are hesitant to buy furniture or houses!” insight still apparently surprises people who wonder why Millennials won’t settle down. Indeed, more adults under 35 live with their parents, beating out the “I’ve got a roommate (or roommates),” “I’m living alone,” “I’ve got a live-in love monkey (or love monkeys),” and “I have a legal spouse” groups.

Consequently, baby boomers are still the primary furniture shoppers; they make up 42 percent of all furniture-buyers in the U.S. and 45 percent of all money spent on furniture. And this isn’t just because baby boomers are busy furnishing their new retirement homes. Some retailers aimed at young adults are actually targeting their parents. At Matthew Zeitlin reported for Buzzfeed, “The bank of mom and dad is our current customer,” the CEO of West Elm parent company Williams-Sonoma told investors on a call in 2015. “Student debt is greater than all credit card debt and substantially greater than all car financing debt. So that has to get paid off.”

How sustainable this intergenerational wealth transfer will be as an engine of the U.S. economy remains to be seen. As Pew Research Center’s Richard Fry said, “The spending that goes on in the formation of a household—the furniture purchases, the appliance purchases, the cable subscriptions, that isn’t happening.”

Want more? There’s a whole archive of So What, Who Cares? newsletters at In addition to the news analysis, there are also fun pop culture recommendations. 

The ‘Bank of Mom and Dad’ Is Stronger Than You Think