Older Millennials Outspend Every Generation on Hobbies, BofA Finds

Older millennials spent a little more than twice as much per customer on hobbies as Gen Z in the three months through August, according to a Bank of America Institute analysis that indexes Gen Z spending at 100.

The group — defined by BofA as people born between 1978 and 1988 — outspent Gen X, baby boomers, younger millennials and Gen Z on a per-customer basis. They also had the highest share of any generation with hobby spending at all.

BofA Institute economist Joe Wadford told Fortune over email that millennials have accelerated hobby-related spending over the past two years, while most other generations have seen cooling in both spending and transactions.

Bank of America defines hobbies as spending at arts-and-crafts stores, hobby shops, outdoor-recreation retailers and service providers, ski resorts, scuba retailers and rentals, adventure-activity providers, educational-toy sellers, outdoor retailers and some toy stores. It excludes travel, golf and video games, which it tracks separately.

The split mirrors housing

The finding echoes an emerging divide in the housing market. Older millennials have become the highest-earning homebuyers, are more likely than younger millennials to be repeat buyers, and are moving into larger homes as their families and incomes grow. Many have accumulated housing wealth, and those who locked in lower mortgage rates enjoy more stable monthly housing costs than renters now facing high rents and down-payment hurdles.

Jessica Lautz, deputy chief economist and vice president of research at the National Association of Realtors, told Fortune in April that a "definite split" was happening within the millennial generation, driven by those who locked in low mortgage rates — and those who didn't. Asked whether this is a structural issue, she said: "I think we're at that point right now … It becomes a renter versus an owner economic scenario."

The BofA data does not show whether a customer owns a home, rents, has children, or uses home equity to finance hobbies, so it cannot prove homeownership drives hobby spending. Wadford said he thinks the pattern is more an age and life-stage effect than a sign of a wealth divide.

"Older Millennials seem to have more in common with younger Gen Xers than they do with Gen Z or even younger Millennials," Wadford said. "That's why older Millennials' hobby spending aligns more with Gen X and Baby Boomers, rather than younger members of the same generation."

Lautz pointed to the financial cushion homeownership can create. "Millennial homeowners have had the opportunity to build housing wealth, and those who locked in lower mortgage rates may have more stability in their monthly housing costs," she said. "That can provide greater flexibility for discretionary spending, whether on travel, hobbies, or other interests."

Freddie Mac's analysis of Bureau of Labor Statistics data supports the divide: renters devoted 39% of their total expenditures to rent in 2023, versus 31% of total spending on housing among homeowners. Renters' growing housing costs were associated with lower spending on apparel, services and food away from home.

The Federal Reserve has found a steep income divide in homeownership as well. Among adults under 60, people earning at least $100,000 were more than three times as likely to own a home as those earning below $50,000.

Lautz cautioned against broad generalizations. "No single trend will be universal across such a large and diverse generation," she said.

Busy, but spending anyway

Older millennials led the hobby category despite having the least free time of any adult age group. Adults ages 35 to 44 average about four hours and 15 minutes of leisure a day, the lowest figure across Census Bureau age groups cited in the report. Their spending suggests leisure has become part of the household budget rather than an individual pursuit, and they may be funding children's activities as well as their own interests.

Wadford said it "makes sense" that millennials would be spending on themselves and others, possibly their kids or young relatives. Lautz noted that later childbearing and lower birth rates than previous generations may leave some millennial households with more discretionary money for their own interests. She added that demand for space is not purely about family size: "For some, that means additional space for a growing family. For others, it could mean a craft room, home office, or gaming room."

'Funflation' reaches hobbies

Hobby spending rose 7.9% year over year in August, while the number of transactions grew 3.4%, according to Bank of America. Spending is rising more than twice as fast as purchases, meaning customers pay more per hobby transaction. BofA attributes part of the shift to consumers rotating away from pricier travel toward hobbies as rising fuel costs lifted airfares.

Gen Z tells a different story. Its hobby-transaction growth was roughly flat in August, down sharply from nearly 16% growth a year earlier, reflecting substantially lower outdoor-recreation spending even as arts-and-crafts and hobby-shop purchases rose. But Gen Z keeps pouring money into games: nearly 28% of Gen Z customers had online- or video-game spending in the three months through August — more than twice the Gen X rate and more than four times the baby boomer rate. Gen Z video-game spending rose about 20% year over year in August.

Wadford noted that Bureau of Labor Statistics data shows older millennials have the highest annual average spending of any age group besides boomers. "It's safe to say they are not only a distinct consumer segment, but one with significant purchasing and economic power," he said. "And while Gen X likely earns more on average, older Millennials may be spending more as they are aging into increasing family demands and financial responsibilities."

For retailers in outdoor recreation, crafts and family leisure, the fastest-growing wallet belongs to consumers in their late 30s and early 40s — and it is increasingly backed by housing wealth.