When it comes to consumer spending habits, factors like economic conditions, gender and slick advertising campaigns all play a part.

But it really comes down to where we are in our life cycle. Age is the main factor driving spending habits, according to Richard Loreto, a former university professor and president of R.A.L. Consulting, a survey and demographic research firm.

They may think they are blazing new territory and aren’t like their parents, but when it comes to how they spend their money, Generations X and Y are following the same patterns as their baby boomer parents and grandparents did at the same ages.

Loreto says while spending habits are influenced by other factors like the sex of the person making a purchase, interest rates, employment numbers and social and psychological influences of branding and marketing pros, age trumps them all.

Loreto’s research is based on reputable data such as that supplied by Statistics Canada, rather than anecdotal findings. He likes to break down the generations based on his pal David Foot’s classifications. Foot, the author of Boom, Bust & Ech, defines the “boomers” as people currently 45 to 64-years-old, the “bust” generation or Generation X as those 32 to 44, and the “echo” kids or Generation Y, as those between ages 16 and 31.

The boomers may think they are going to defying aging and remain hip and cool forever, but the stats don’t bear that out. But they aren’t the same consumers they were at 25.

Those young Gen Y-ers may be spending their cash on smart phones, iPods, DVDs, etc. but their boomer grandparents spent a similar portion of their incomes in the 1980s on audiovisual products like VHS and Beta players and tapes, Walkmans, etc.

People spend the most on alcohol and tobacco in their 20s; this dips off as they move into their family-raising years, goes up slightly as they become empty nesters, then drops off again.

Like the over-65 set just ahead of them, baby boomers will likely follow similar spending patterns: they will spend a greater portion of their income on food and shelter than their younger cohorts, and generally aren’t going to be splurging on things like trendy new wardrobes.

“I like to look at things historically and we tend to act our age and that’s a fairly durable assumption over time,” says Loreto. “The Me Generation (boomers) may think ‘we are going to be different’ and our knees aren’t going to wear out but there’s no guarantee on knees. The older you get, despite your best efforts, you tend to look and act your age. If you’re 80, you’re 80, you are not 20.”

The front end of the baby boom is quite well off, especially those with good pensions. Condo living is one of the shifts among baby boomers. There is a greater uptick in condo sales among the 55-plus set. But Loreto says it’s unlikely that they’ll be flocking in droves to high-rise suites.

“There will be a blip in the cottage and condo markets because the boom generation is so large, but the uptake is not going to be 100 percent,” he says. “If anything is likely to take off, it’s the renovation and retrofit business, which is aided and abetted by the energy efficiency movement. The majority of boomers will stay put and improve their homes.”

Just like their parents before them, Loreto says Gen Xers (or bust generation) start heading out to the suburbs when their children start arriving in search of single detached homes with backyards. A decade from now, Loreto says there will be thousands of fewer people in their 40s, which will bring about changes in the workforce and a much smaller move-up market for those big executive-style surburban homes.  Generation X accounts for just 18 per cent of Ontario’s population, compared to the boomers, who account for 29 per cent.

The “echo” kids, who are greater in number than the “bust” generation (22 per cent of the province’s population) will bring new vibrancy to the rental market and first-time home ownership over the new 10 years as they finish school and move into the workplace, Loreto predicts. What will be different is that they will get married and have children later than the previous generations.

The immigrant factor is also influencing consumer habits, especially in Toronto, where many tend to settle. According to Ishan Ghosh, Executive vice-President of The Brand Factory (a branding, marketing and consulting firm), the new wave of immigrants is young, affluent and well travelled. They bring cultural nuances with them, such as their need to keep connected. Entertainment providers are recognizing this with new TV channels and the popularity of major league soccer and cricket. Retailers such as Walmart and Loblaws are offering products catering to this group.

Immigrants are also on the leading edge of another trend gaining traction or rather, an old trend gaining new popularity: multiple generations living under the same roof.  While this is a common tradition in many parts of the world, it hadn’t been popular in Canada for decades. But with immigrant families showing how this can be done successfully, more Canadian households are embracing this living arrangement. Economics are one reason, but families are also realizing the benefits in having a built-in support system of extended family members.

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