Gen Z is showing extraordinary financial discipline, saving more than any other generation before them. Nearly 1 in 4 Gen Z members manage to save between 11% and 20% of their monthly income, with some even saving their entire paycheck. This represents a major shift in approach to money compared to older generations.
On the other hand, a third of boomers and over a quarter of millennials admit to not saving a penny each month. In a time of economic uncertainty and inflation, Gen Z is showing that it is ready to face the future with a clear mind and regular accounts. Despite the inclination to cut back, 87 percent of Gen Z and 84 percent of Millennials consider certain nonessential items and services to be “necessities.” These “necessities” are defined as items they are willing to spend money on, regardless of their financial state.
Fifty-six percent of Gen Z and 59 percent of Millennials consider spending on hobbies and interests as a necessity rather than a luxury.
Gen Z saving more amid challenges
Nearly half of young consumers (51 percent of Millennials and 45 percent of Gen Z) said they would rather reduce long-term savings than give up certain lifestyle experiences such as dining out, travel, and fitness memberships.
Courtney Alev, Credit Karma’s consumer financial advocate, highlighted the emotional aspect of spending. “Heightened emotions can drive us to spend money, whether it’s as a distraction, something to look forward to, or a way to spark joy during stressful times,” said Alev. Given the persistently high cost of living, it’s not entirely surprising that young people find comfort in spending on enjoyable activities amidst economic uncertainty.
Streaming services like Netflix and Hulu are considered necessities by 36 percent of Gen Z, 37 percent of Millennials, 37 percent of Gen X, and 29 percent of Baby Boomers.
Top fashion and beauty-related nonessential items considered necessities include skin care and beauty products (27 percent of Gen Z and 26 percent of Millennials), new clothes (23 percent of Gen Z and 19 percent of Millennials), and treatments like manicures, facials, or hair appointments (20 percent of both Gen Z and Millennials). When asked what is influencing their spending philosophy, 60 percent of Millennials and 53 percent of Gen Z who consider some nonessential items and services to be necessities responded that it is influenced by their desire to maintain a semblance of normalcy and joy in their lives. As economic challenges endure, Millennials and Gen Z continue to adapt, redefining their financial priorities and what they deem necessary to maintain their quality of life.