Contrary to popular belief that young adults are careless spenders, recent data suggests they are actually more frugal, primarily due to rising housing costs. Between 2010 and 2023, Canadian households under 40 saw the slowest growth in consumer spending, barely keeping up with inflation, according to Statistics Canada’s Survey of Household Spending.

During this period, overall inflation rose by 35 percent, but shelter-related expenses for those under 30 increased by 75 percent—more than double the national average—and rose by 58 percent for those in their 30s. As a result, younger households allocated a larger share of their income to housing, with those in their 20s increasing from 28 percent in 2010 to 35 percent in 2023. Unlike older age groups, these younger households reduced spending on most non-housing categories after accounting for inflation.

Two categories contributed significantly to this decline: fashion and accessories, where spending dropped due to the availability of affordable fast fashion and increased thrift shopping; and transportation, reflecting lower car ownership, increased use of public transit and ride-hailing services, as well as pandemic-driven shifts to remote work.

While young people do spend on small indulgences like restaurant snacks and beverages, expenditure in this category remains minimal. Households in their 20s spent about $433 annually on such items in 2023, representing less than 1 percent of their total spending—and this proportion has declined since 2010.

Patterns in health-related consumption have also shifted. Smoking rates among 20-to-24-year-olds fell dramatically from 30 percent in 1999 to under 8 percent by 2022, although some of this decline is offset by increased vaping. Alcohol consumption among younger adults has likewise decreased significantly, particularly among men, with those abstaining rising from 12 percent in 2015 to 24 percent in 2024 for men aged 18 to 34. These trends are partially counterbalanced by higher cannabis use.

In 2023, households in their 20s spent roughly $1,700 on alcohol, tobacco, and cannabis combined—the lowest among all age groups except seniors—and this represented about 2 percent of their income.

Younger generations are also traveling more frequently, but falling real costs of air travel and reduced car ownership mean that travel expenses are often offset by savings on vehicle-related costs. Additionally, while attendance at concerts and subscriptions to streaming services have become more common, young adults go to movie theaters less often, are less likely to pay for cable television, and do not incur the costs of purchasing prerecorded music, unlike previous generations.

This trend toward reduced overall consumer spending among young people is not limited to Canada. A 2018 study by the U.S. Federal Reserve found that millennials spend less than previous generations not because of a stronger inclination to save, but due to lower disposable incomes.

The restrained spending habits of younger cohorts have drawn attention from marketers and retailers seeking ways to encourage greater consumer engagement. However, the decline in non-housing expenditure among young people creates challenges for industries such as retail, entertainment, and hospitality, which have historically provided key employment opportunities for this demographic.