In a world where every generation tends to have its own unique spending and financial priorities, Gen Z is turning out to be one of the most fascinating cohorts to observe. As digital natives who came of age during an era of swift technological change, economic volatility, and global interconnectedness, Gen Z’s spending habits are unprecedented. Their mindsets around money, consumption, and the future are a singular blend of pragmatism, ambition, and reserve. But why do Gen Zers spend as they do — and how does that compare to Millennials, Gen X, and Boomers?
1. The Digital-First Generation: Experiences Over Products
For Gen Z, spending isn’t about buying things — it’s about buying experiences and creating memories. While Millennials, who have come to be defined as experiencing “millennial burnout” and seeking experiences rather than things, did take up traveling, dining out, and other activities, Gen Z has done so on steroids. Whether concert tickets, festivals, immersive experiences, or virtual events, Gen Z is all about exclusive, shareable experiences rather than accumulating physical goods.
“Experiences” are more accessible than ever before — and Gen Z is jumping at the chance. Social media platforms like Instagram, TikTok, and YouTube are filled with influencer content advertising everything from secret pop-up parties to virtual reality events. For Gen Z, the excitement of buying something tangible is replaced by the excitement of investing in an experience that will be shared with others and posted online. This attitude is shaped greatly by the TikTok era, in which trends and viral moments are often built around experiences rather than purchases.
But this does not indicate that Gen Z isn’t spending on goods. They are — but they’re choosy. Their buying choices are highly impacted by brands that are aligned with their values and carry a sense of identity. Gen Z wants to buy from companies that are socially responsible, green, and transparent in their practices. Unlike Millennials, who overspent on “luxury” products as a symbol of status, Gen Z wants products with meaning, and they will be more likely to buy from brands with meaning. They desire to be able to associate their expenditure with a greater cause, whether this is promoting sustainability, small enterprise, or marketplace diversity.
2. Frugality and Financial Caution: Learning from Economic Uncertainty
While the Millennial generation is accused of “killing” industries like the diamond industry or traditional homeownership (through their experience obsession rather than possession), the Gen Z generation handles finances in a different, sometimes more conservative way. They’re living post-great recession of the financial crisis of 2008, have seen the economic upheaval that followed the COVID-19 pandemic, and are dealing with the weight of runaway student loan and housing expenses.
This financial uncertainty has bred a generation that’s wiser with money than their predecessor Millennials. 52% of Gen Zers surveyed in a 2021 Deloitte survey reported that they were “extremely or very concerned about their personal financial future.” Financial stability is important to many, and they are turning to side hustles, gig economy jobs, and entrepreneurship as a way to grow their financial independence. Gen Z has come up seeing Millennials struggle with student loans, job instability, and the challenges of home ownership, and most are choosing to be conservative with their spending, especially in their early days.
This means Gen Z will most probably save first before they spend and choose long-term stability over short-term indulgence. Unlike Boomers, who learned to put money and retirement savings first, Gen Z is just learning how to save and invest, but they’re doing it in a manner that makes sense to them. They’re using digital channels like investment apps (think: Robinhood, Acorns, or even platforms for cryptocurrency) to be able to dictate money in the moment, which reflects their digital-first nature.
3. The Rise of Influencer-Powered Shopping: Social Media as a Bazaar
Another spectacular deviation between the consumption habits of GenZ and previous generations is the use they make of social media. Platforms like Instagram, TikTok, and YouTube have become a regular part of the decision-making cycle of Gen Z when it comes to expenditure. But it’s not just a matter of seeing ads or influencer-following; Gen Z’s consumer experience is deeply tied to their use of social media. “Social commerce” is growing, in which Gen Z discovers products by way of content rather than advertisement or brick-and-mortar locations.
Influencers — either celebrities or micro-influencers — have huge sway over Gen Z. They trust people who seem authentic and real. If the influencer they follow is promoting a product or a service, they’re more likely to purchase it than if they saw a run-of-the-mill celebrity endorsement or a run-of-the-mill advertisement. Actually, 60% of Gen Z consumers said that social media influences their purchases. The “cool factor” is now dominated not by traditional advertising but by a new young generation of peer recommendations that feel more authentic and aligned with the values of Gen Z.
Also, social commerce makes it possible for Gen Z to shop within the app on platforms like TikTok, Instagram, and Snapchat, where they can shop without ever leaving the app. It’s seamless, integrated shopping — and a testament to their demand for ease and instant gratification. Spending is no longer a matter of “retail therapy” in a physical store; it’s a matter of having product recommendations around them always that appeal to their interests and values.
4. Gen Z Attitude towards Debt: A Conservative Approach
As opposed to Millennials, who are accused of having “debt problems,” Gen Z is conservative when it comes to assuming financial responsibilities like credit card debt or student loans. According to a Bank of America study released in 2020, Gen Z is inclined towards settling debts immediately, avoiding the use of credit as a source of long-term financing. They are well aware of the financial struggles that Millennials have faced when it comes to student loans, mortgage debt, and credit card bills, and they do not want to repeat the same blunders.
This financial prudence has made most Gen Zers postpone significant life purchases like cars or homes, or go for more lenient and cheaper alternatives. Temporary rentals of an apartment, use of shared economy services like Uber and Airbnb, and getting used to working from home have become the way of life, as Gen Z prefers to avoid the heavy financial burdens involved in house ownership and long-term loans.
5. How Gen Z Envisions the Future: Optimistic yet Anxious
In spite of economic conservatism and the challenge of growing up during an economically uncertain time, Gen Z is unexpectedly optimistic about the future. Most dream of technology solving the world’s problems, whether climate change or access to healthcare. And yet, they are not naive — there exists a palpable background anxiety and uncertainty about what the future holds.
Gen Z is acutely conscious of the climate crisis, job insecurity, and the rising cost of living. They’ve grown up in a world that’s seemed more uncertain than stable, and while they’re incredibly committed to fighting for change, they’re also realistic about the hurdles they face. 70% of Gen Z reported in a Pew Research Center report that they have a lot of pressure to succeed, and most worry about the future of the world and their ability to be able to secure, fulfilling work.
But despite this anxiety, Gen Z is determined. They are fiercely self-reliant, digitally fluent, and wonderfully resourceful. They see the world in possibilities for disruption — from creating new types of businesses to disrupting outdated social systems. They’re not waiting for the future to show up; they’re creating it.
6. The Bottom Line: Gen Z’s Spending Habits Reflect Their Realities
Finally, Gen Z’s shopping habits are an extension of the world they have experienced. They will be less likely to overspend on material objects and more likely to spend on experiences, social commerce, and online channels that speak their language. They’re budget-conscious, learning from previous generations’ financial mistakes while maintaining big dreams for their own futures.
What sets Gen Z apart is that they can balance wise financial planning with a desire for experiences, social connections, and innovation. They’re optimistic but realistic, spending on what matters — yesterday and tomorrow. As they continue to reshape the younger generation’s approach to spending, one thing is for sure: Gen Z isn’t just transforming how we shop, but how we think about the future and money too.