What exactly are “Affordable Luxuries” – And How come Millennials Buying Them?

 What exactly are “Affordable Luxuries” – And How come Millennials Buying Them?

Born between 1982 and 2000, Millennials represent the first generation of individuals reaching adulthood in the early Twenty-first century and have developed with the Internet along with other technologies.

The differences between Millennials and also the generations that came before them (Gen X, Baby Boomers) happen to be discussed extensively, and they are often viewed as being entitled and debt-ridden due to their spending habits.

Millennials already from the largest segment within the population, and increasingly more of them will probably be your colleagues, customers as well as employers. Understanding how they believe and behave is critical for any person or business wanting to remain relevant in the future.

One trend that seem to baffle non-Millennials is “affordable luxuries”, where Millennials are prepared to invest in things like luxury bags, cafe food, holidays, even though they might be perpetually broke or perhaps in debt. We’ll take an in-depth take a look at “affordable luxuries” to help you appreciate this phenomenon better.

What Are “Affordable Luxuries”?

“Affordable luxury” may seem like an oxymoron – could luxury, that is commonly understood to be expensive, also be affordable? The answer is yes: millennials are seeking a type of luxury that is not only within their financial means but additionally enables them to possess a taste of a lifestyle normally out of reach.

An illustration of an “affordable luxury” is flavored coffee. Millennials are increasing their expenditure on coffee from chains like Starbucks and Instagram-worthy cafes which easily is more expensive than USD 5 per cup.

This trend has been considered to be prevalent in several countries, including Taiwan, South Korea, and the United States. In the US, it had been reported the average 25- to 34-year-old spent USD $2,008 per year at coffee shops, and according to market research through the money app Acorns, 41% of millennials admitted to spending more on coffee previously year than they had committed to their retirement accounts.

Another illustration of an “affordable luxury” is home fragrances which includes room sprays, candles and diffusers. These fragrances aren't cheap, especially those from brands such as Diptyque and Jo Malone. They're neither a necessity for most people. However, the demand for such goods is clearly increasing. According to Allied Researching the market, the global air freshener market is expected to grow for a price of three.2% to USD $12 billion by 2023.

South Korea reaches the forefront of the consumer trend as the largest and fastest-expanding market. The country's fragrance market totalled USD 2.49 billion in 2021, with candle products growing from USD 55.3 million in 2021 to USD 184.5 million in 2021. Shinsegae, an extravagance department store, said that air-fragrance sales increased 60% year-on-year in 2021, while sales of health products like candles and diffusers in cosmetics store Olive Young went up by 90% in just twelve months.

Why Are These Millennials Spending More about “Affordable Luxuries”?

This new trend of buying “affordable luxuries” rather than saving for future years is known as so-hwak-haeng () in Korean, and xiao-que-xin (小确幸) in Chinese. Both of them translate to “small but authentic happiness”. The trend is particularly prevalent in South Korea and Taiwan, where millennials are struggling with employment and job prospects.

Despite being one of the best-educated categories of young people in the world, South Korean college graduates spend typically 10 months seeking employment after graduation, based on market research. And in Taiwan, fresh graduates are can not support themselves using their starting pay that is an average of NTD 27,000 monthly (for reference, NTD 27,000 is about SGD $1,185).

In the face of bleak long-term economic prospects, many millennials now worry more about their financial problems for the short term, such as spending money on rent, transportation, and how they are able to save money on their next meal. Due to the struggle to pay the bills every day, they're less likely to plan their finances in the future, much less save for big-ticket items for example cars and houses.

The issue is further exacerbated by the fact that an enormous proportion of millennials don't believe that things will get better on their behalf in the near future. Up to 50 % of young South Koreans said inside a 2021 survey that they do not believe they will do better than their parents, while only 29% had such views in 2006.

Singapore sports an identical trend among its millennials. The Singaporean imagine possessing the 5Cs – cash, car, credit card, condominium, and a country card membership – has become “in the past”. In 2021, almost 50% of Singapore millennials surveyed were pessimistic regarding their immediate career.

Since millennials foresee that they'll not be able to afford assets like a car within their lifetime, then they use more affordable and accessible luxuries. For instance, a typical Jo Malone diffuser costs about USD 118 – a cost they are wiling to fork out to produce a “luxurious” home environment, even when the truth is they reside in a tiny rented apartment.

Live Within the Moment, Worry Later

While that is certainly worrying that millennials appear to be abandoning saving for his or her future, Kim Nan-do, someone studies professor at Seoul National University, tries to offer another perspective for this mindset: “In yesteryear, a future-oriented paradigm prevailed. We saved a great deal, get yourself ready for tomorrow. Now, more and more people cherish the industry of the present.”

Watch: 5 Things Singaporeans Do To Save Money, Just for These to Wind up Spending More

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