A New Generation of Penny Pinchers

We don’t automatically think of Generation Y when we look at old photos of Depression-era poor folk staring at the camera, the acid of a caustic economy etched into their faces.

But in a way, people who grew up in the 1930s share something with latter-day millennials, those born around the early 1990s. Both groups came of age during hard times. It has shaped them as consumers.

Sure, the Great Depression’s sick list tops the Great Recession’s. The U.S. economy was worse off 80 years ago. But the Great Recession took its toll, including smacked-down young people who lived their formative years during the worst economy since, well, the Great Depression.

Those difficult times affect millennial spending, says Mike Martinez, chief marketing officer for DMEautomotive, a company that tracks buying behavior by age groups.

“These are children of the Great Recession, and in many ways their spending patterns are just like the children of the Great Depression,” he tells me. “A core is there for both groups. It is an alignment of values in that both look for value in a purchase.”

Baby Boomers who grew up in good times developed a reputation as free spenders. But the generations that came before and after them are known for spending sparingly.

What do you call the children of the Depression, Generation D? Sometimes they’re referred to as the Silent Generation. Whatever the term, many of them, from their circumstances, hewed an early and lasting sense of frugality.

My Mom was one of them. Her financial situation improved as an adult, but throughout her life she continued to spend cautiously, seek bargains and clip coupons.

My son in his 20s shows similar traits. He uses money-saving coupons but he doesn’t clip them, he prints them from websites offering deals. That act represents a striking contrast between Generations D and Y. The latter is utterly wired.

“Where millennials are different is they use extraordinary tools such as mobile devices as part of their shopping and pursuit of price transparency,” Martinez says.

A new DMEautomotive study indicates young consumers avidly use multiple information channels in deciding where to get their vehicles serviced.

In the course of reaching such decisions, they are up to six times more likely than their elders to scan QR codes, download apps, use social media, view online videos and read advice-dispensing blogs.

The study results are important to dealership service departments that want to reach young customers, Martinez says. “The findings show all customers are receptive to a diversity of communication platforms, but under-35 people are strikingly receptive.”

The younger end of Generation Y, people now in their late teens and 20s, grew up during wars, a lousy economy and massive technological changes, he says.

It’s wrong to brand them as jaded. But they are products of their times. Many of them still live on limited funds, struggling in a weak job market and facing an unemployment rate higher for their age group. 

“They are buying 16% fewer cars and houses,” Martinez says. “They are putting off deciding to get a driver’s license. If they don’t need a car, they don’t buy one. It is a more thrifty generation than we’ve seen in a while.”

Millennial car buyers are price- and payment-sensitive, says Arianne Walker, J.D. Power and Associates’ senior director-media marketing solutions. “We’ll keep an eye on that to see if it evens out as they get older.” 

But traits shaped early on can stay put. That includes spending habits.  

“Will these thrift-minded kids, as they age, snap back to the behavioral trends we’ve seen before?” Martinez says. “I don’t think so.”