Gen Z Budgets: Spending Habits in a Changing Economy

Generation Z, facing economic challenges, is developing unique spending patterns, from embracing secondhand shopping to navigating the rising cost of living. A recent study reveals that over two-thirds of them actively budget, setting them apart from older generations in managing their finances.

Budgeting and Priorities

Jenna, a 26-year-old from Cincinnati, Ohio, works as a buyer. Her rent is her biggest expense, at $1,150 monthly. Jenna contributes 25% of her pre-tax salary to retirement accounts, including a 401K, Roth IRA, and HSA. She prioritizes local groceries and skincare products, considering them essential. She spends around $475 on groceries and $175 on skincare.

Jake, 28, lives in Seattle, Washington, and works a seasonal customer service job. He and his wife share expenses from a joint bank account, including rent, utilities, travel, and dog bills. They allocate funds for emergencies and are wary of the stock market. His expenses total around $1,515 monthly.

Mark, also 26, resides in Raleigh, North Carolina, and works as a data scientist. He saves diligently and pays for travel to see his partner in the UK. His largest expense is rent, but he tries to save money on things like entertainment. His monthly expenses amount to roughly $2,776.

Individual Spending Choices

Anna, 22, in Washington, is a part-time teacher and writer living at home. She doesn’t budget strictly but monitors income and expenses, saving a significant portion of her income. She spends on food, savings, TV subscriptions, and software. Her monthly expenses are about $690.

“I’m young and because of my lifestyle I don’t have certain expenses that I will probably have in a few years (like a car, gas, auto insurance etc.) so I save most of my money.”

—Anna, Part-time Teacher and Writer

Many Gen Z members are prioritizing experiences over possessions. This trend is reinforced by the fact that Gen Z spends more on subscriptions than Baby Boomers, with subscriptions like streaming services and meal kits.

Financial Goals

Jenna mentioned she is not saving for a home yet. She is considering going back to school soon. Mark aims to save for a down payment on a house, even though he earns a good salary, but finds it challenging in his desired location.

While they have different earnings, nearly 70% of Gen Z members use budgets for financial management. This behavior is influenced by financial pressures and future aspirations. The focus is on planning and saving for the future. Pew Research shows that Gen Z is more likely to have a savings account than older generations.

Challenges and Splurges

For many, “doom spending” is a coping mechanism. Jenna admits that skincare is her “splurge,” while Anna splurges on items related to music and history. Mark, despite his average expenses, acknowledges that his costs are on the higher end compared to friends in other locations.

Jake says that he is not a big saver, but focuses on putting money away for emergencies, like car repairs and vet bills.

The diverse approaches of Gen Z to spending highlight their adaptability and the importance of financial planning. Their financial habits are molded by current economic conditions, creating a complex financial picture.