Case Study

Learnings from the Lab: What Millennials Can Teach Us About Spending Thoughtfully

Millennials are the largest living generation in the United States. To understand what makes Millennials tick financially, we set out to measure how satisfied they are with their purchases. Or, put a different way, to see which expenditures they regretted the most.

Behavioral Diagnosis and Key Insights

As explained in our 2016 report, we partnered with Qapital to explore this question. Qapital is a mobile banking application that helps people save money by enabling them to set up automatic savings rules.

Together, we designed a survey tool that allowed users to link to their bank account in order to reflect on past purchases. They could then rate the most recent 40 transactions on a scale from 1 (highly regrettable) to 100 (a great decision).

So, what did we find? From analyzing about 30,000 transactions dating back to the beginning of 2015, here are the four key insights we collected:

  1. Millennials spend on enrichment and on others. In the study, we measured what types of purchases were most pleasing to people and when they were most pleased with their purchases. Five different types of purchases generated a satisfaction level of 75% or above (in order): community, healthcare, utilities (including rent), arts & entertainment, and education. Overwhelmingly, these all have to do with self-preservation or enriching oneself.

At the same time, Millennials were much more content with purchases made mid-week and in early December. From this, we can infer that purchases made for others (during the holiday season) bring more pleasure, and that people tend to prefer those purchases made mid-week (Wednesday had the highest satisfaction rating) over those potentially made more impulsively on the weekend.

Together these insights suggest we can derive the highest satisfaction when buying for others, when enriching ourselves, or when making thoughtful and deliberate purchasing decisions.

  1. Put the essentials on auto Millennials were generally about 10% more satisfied with recurring transactions compared to non-recurring ones. One reason for this is because humans are great adapters.

Our first experience of something is novel and interesting, but after several similar experiences the novelty and our attention wanes until we no longer have the same response. Rip off a Band-Aid once and it hurts. Rip it off multiple times and we begin to discount the pain. In the same way, more noticeable transactions are more regretful.

By setting up automatic payments for recurring and relatively stable transactions such as rent, insurance, and car payments, we can discount the financial pain of those payments and become more satisfied with them as regular occurrences. On the other hand, they make the payments we’re likely to regret (another round of drinks or fast food) more obvious and novel because the latter are more likely to be paid for in cash.

  1. Limit impulse While those expenses that are necessary for living – rent, healthcare, groceries – reside near the top of the satisfaction results, the more optional purchases fall to the bottom.

Millennials rate bar purchases, digital subscriptions, convenience store buys, coffee shop expenses, restaurant visits, and fast food purchases as their least satisfying expenditures. Only bank fees rate lower.

These types of purchases can often be made on the weekends, when Millennials also showed a high degree of regret. We can begin to reason that Millennials take far greater pleasure in making responsible, deliberate and necessary purchases over spontaneous, frivolous ones.

  1. Second guess the small stuff, but don’t rationalize the big Across all types of purchases, Millennials were less satisfied with smaller purchases than with larger ones. Why do we regret smaller purchases more?

People often look backwards to justify their decisions rather than making decisions based on sound reasoning and evidence. If we spent a lot of money on something that we didn’t like, we rationalize ourselves into believing that we must have made a good purchase because it was an expensive one.

We can learn two lessons from this experiment. First, question the small purchases. Just because that latte only costs $4 does not mean it’s inconsequential or won’t bother us later. Second, research the big purchases.

Instead of rationalizing them away after the fact to justify the expense, research and make an informed decision. Your happiness will thank you on both counts.


Qaptial has used these findings to inform their ongoing innovation and product development. For more analysis on this subject, see our published report.