Are Gen Z really that bad with money?
it's about context
Many publications and experts seem to obsess over Gen Z spending habits, often claiming that young people are more interested in Netflix and Starbucks than they are housing deposits. Is it all just heated conjecture, or is there some truth to these allegations of financial incompetence?
Financial struggle is a phenomena that most of us will be familiar with to some degree. While our economic backgrounds are often diverse and varied, nearly everyone has had a stressful period where cash is tighter than usual.
With bills seemingly set to spiral upwards indefinitely, it’s getting increasingly harder to save money, rake together a deposit, and climb onto the property ladder. With our budgets stretched thin, months or years of financial turbulence and worry are becoming more common and long-lasting, leaving plenty of Gen Zers nervous about their ability to look after themselves without support.
Is this new-age phenomena really the product of rising living costs, or is it the fault of Gen Zers and their spending habits? Answers range wildly from one extreme to the other, depending on who you ask or which social media platform you browse.
For older Gen Xers and Baby Boomers, the prevailing narrative seems to be that young people simply spend too much on gigs, takeaways and coffee. Take this article by Fortune, for example, which mentions Taylor Swift tickets in its rage-bait headline before exploring a lack of financial education in schools.
The Economist claims that Gen Z are ‘unprecedently rich’ and argues that young people today are better off than any generation prior. Some publications have gone so far as to describe Gen Z shopping as ‘doom spending’, citing it as a coping mechanism amidst their overwhelming pessimism toward the state of everything. These articles describe young people and their spending as a splurge, spurred on by easy social media access and peer-to-peer recommendations.
There is undoubtedly some truth to these takes. The rise of fast-fashion giants like Shein and Temu suggest there is a huge mass market for cheap, environmentally-questionable products that encourage us to spend our disposable income in regular increments, rather than purchasing a single product that lasts. Gen Z has to be spending big to some degree in order for these types of shopping sites to thrive.
Similarly, concert tickets and stadium tours continue to sell out across the globe, despite the ridiculous increase in costs over the past decade. Dynamic pricing, VIP packages and extortionate festival entry fees haven’t stopped young people from coughing up the cash, even if it means taking a chunk out of the savings pot. That’s good news for the music industry, but doesn’t bode well when it comes to actually purchasing anything tangible that lasts.
So, are Gen Z bad with money? Perhaps. It’s easier than ever to impulsively purchase a jacket that pops up on a personalised Instagram advert, and companies like PayPal offer plenty of ways to part with your money in seconds. It’s quick, simple and easy to do.
With that being said, Gen Z are in a particularly difficult position when it comes to purchasing property or living independently. As we’ve previously reported, a majority of young people now require the help of parents or a third-party aid to buy their first home. Aside from 2024, every single year over the past decade has seen an increase in the number of first-time buyers using parental cash to make their dreams come true.
Wages have not kept up with inflation over the past few decades either, which means that pay cheques for young people do not go anywhere near as far as they used to. Rent prices have soared alongside stagnant salaries, with many Gen Zers now spending over 60% of their monthly income on rent alone. With bills and other utilities added on top, many are left with very little to use as disposable income, let alone save.
Couple all of this with student loans that were non-existent for Gen X and Baby Boomers and you have a recipe for financial turmoil. Is it any wonder that Gen Z want to spend the little cash they can on things they want to do? If it’s impossible to save up for a deposit, why not go to a gig, buy a latte, or travel? The alternative is to do nothing while you’re young and eventually splash cash on a property you may not even really want by the time you’re almost forty.
The key difference today compared to last century is that a regular job does not guarantee any financial security. Sure, it will help, but a regular job that pays £30,000 in the UK probably isn’t enough on its own to award you a deposit, house, a pension, and additional savings. You’ll need a partner, help from your parents, or a loan at the very least.
It’s not the Netflix subscription that’s the problem. It’s the cost of the property you’re watching it in that is.
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What critics mean, to give them benefit of the doubt, is amount of emotion in decisions that Z makes. It is too high, on average.
Part of it is that marketing corpos prey on emotional triggers. They often offer nothing of substance: like yet another app or product that has nothing special about it. A game skin.
X and Boomers did not have fast digital systems that could exploit their emotions as much. TV shopping and malls were also predatory but they didn’t have teeth of the online sharks.