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A Look at Gen Z’s Financial Habits, From Spending to Saving and More

Nicole Spector
·7 min read
Cropped shot of an unrecognizable woman out shopping in the city.
Cropped shot of an unrecognizable woman out shopping in the city.

For years, marketers were obsessed with understanding millennial spending behavior, and while this generation still holds immense influence, a younger cohort has risen into the spotlight: Gen Z. Aged anywhere between 8 and 23 years old, Gen Z makes up about 20% of the U.S. population. Given the wide age range, this demographic defies blanket categorizations — after all, what does a 23-year-old have in common with an 8-year-old? Hopefully not much.

Read More: These Are the 50 Best Cities for Gen Z To Live Well on a Budget

But there are some big-picture key takeaways researchers have established about Gen Z: Unlike millennials who entered the job market during the height of the Great Recession, they were set to inherit a strong economy (pre-COVID-19) with low joblessness. We also know that members of Gen Z are more racially and ethnically diverse than any other generation before them. And, according to Pew Research, Gen Zers who were over 13 in 2018 tend to be similar to millennials in that they lean progressive. Roughly three-quarters of Gen Zers surveyed by Pew in January 2020 didn’t approve of President Donald Trump — and that was before the deadly pandemic struck.

Perhaps most importantly, from a marketing perspective, Gen Z doesn’t have a strong recollection of life before smartphones and social media. They’re naturally tech-savvy because tech has always been a part of their natural world. And money? They have a strong sense of that, too. Here’s a look at some of Gen Z’s most well-evidenced spending and saving habits, according to financial and branding experts.

Last updated: Dec. 22, 2020

The young couple carries shopping bags and walks through the mall, wearing protective masks, life in a time of pandemic.
The young couple carries shopping bags and walks through the mall, wearing protective masks, life in a time of pandemic.

Shopping Habits

Gen Z might have been basically raised on their phones, but they still value a quality brick-and-mortar experience — in fact, they favor in-store shopping when making a purchase.

“Gen Z prefers the in-person shopping experience rather than strictly online,” Dr. JeFreda Brown, a graduate of Walden University’s Doctor of Business Administration, told GOBankingRates. “When shopping, they focus on price, value and they look for new, innovative products and services. This generation is also very focused on health and wellness.”

Bradley Stevens, business coach and CEO of LLC Formations, pointed to a 2019 A.T. Kearney survey, which found that 81% of Gen Z prefers to shop in physical stores and 73% of them like to discover new products in stores.

“Shopping in physical stores in the new retail therapy for this generation,” Stevens said. “Fifty-eight percent of the population says that searching for products on the shelves and racks allows them to disconnect with social media and the digital world.”

In the News: Gen Z and Millennials Lead ‘Retail Investing’ Trend – Owning Up to 25% of the Stock Market

Close-up photography of two hands while giving gift.
Close-up photography of two hands while giving gift.

Holiday Spending

This youthful generation also has a strong traditional side when it comes to holiday shopping — but they aren’t willing to go overboard, research from MassMutual shows they’re budgeting for holiday shopping and sticking to it.

“According to a recent MassMutual consumer poll nearly three-quarters of Gen Zers and millennials have a budget for this holiday spending season and they plan to stick to it,” said Amanda Wallace, head of insurance operations with MassMutual. Two-thirds will spend the same or less than last year, with one-third (32%) focusing spending on things that have real meaning and that are necessary and over a quarter cutting back on spending to ensure they have enough savings should the economy worsen.”

Read More: How To Survive a Holiday Season Financial Crisis

Woman in shopping mall with bags shopping during pandemic and wearing face mask against coronavirus.
Woman in shopping mall with bags shopping during pandemic and wearing face mask against coronavirus.

Brand Loyalty

For Gen Z to be interested, a brand needs an expansive digital presence with strong social cues.

“Given the sheer amount of time this generation spends online, it makes sense they’re more responsive to brands who dominate the e-commerce space,” said Nishank Khanna, CFO of Clarify Capital, a fintech company. “Discovery and information gathering about brands happens organically. Social channels are huge for brand loyalty. Think of Revolve, for example, a retailer that has invested tons of capital into engaging Gen Z on social channels through influencers.”

Influencers are of crucial importance to Gen Z consumers, who turn to them for trustworthy, candid insights about products.

“When a trusted social source endorses a brand, they’re likely to win over a Gen Z member,” Khanna said. “Over 1 in 4 members of Gen Z report using social media recommendations to inform their purchasing decisions and help with discovery.”

Read: Life Events That Millennials and Gen Zers Are Choosing To Go Into Debt For

young woman using a store credit card
young woman using a store credit card

Brand Values

Millennials taught brands that in order to win their purchases, they have to be invested in meaningful causes; Gen Zers are doubling down on this demand, insisting businesses align with social and eco-friendly ethics — while staying affordable.

“The brands that Gen Z purchases must line up with their values and the causes they support,” Dr. Brown said. “However, price is still the main decision factor. Most Gen Zers are children, so they do not have the sources of income to purchase high dollar items. They are loyal to brands that provide quality products at affordable prices, are well known and that are not constantly changing.”

Find Out: Big-Name Brands That Have Been Around for More Than a Century

Woman managing the debt.
Woman managing the debt.


“Thankfully, when using a credit card, more than half of Gen Zers and millennials say they pay it off immediately when it comes due and another one-third indicate they pay it off over the course of a few months,” Wallace said. “This is important as a low credit score can result in difficulty securing a loan or high-interest rates, which can lead to having less money available for immediate or future priorities, including savings.”

Read More: How Gen Z Plans To Avoid Student Loans

Female hands with dollar banknotes close up.
Female hands with dollar banknotes close up.

Preferred Payment

In line with Gen Z’s aversion to credit card debt, a new survey from Shopkick found that 24% of Gen Z is more likely to pay for their holiday purchases with cash than older generations.

A recent survey from AfterPay found that 56% of Gen Z shoppers are more likely to purchase items from a retailer if a Buy Now, Pay Later service is offered.

“What’s more, Gen Z shoppers don’t like to spend money they don’t have. Ninety-four percent of Afterpay’s Gen Z customers use their own money, linking their account to a debit card,” said Nick Molnar, co-founder and North America CEO of Afterpay.

Dr. Brown noted that Gen Zers are also big fans of mobile payments and digital wallets.

Find Out: What Does Google’s Move Into Venmo and Bank Territory Mean for You?

Coins in glass jar with retirement label, financial concept.
Coins in glass jar with retirement label, financial concept.

Retirement Planning

“2020 was a year ripe with paradoxes — while millions of Americans faced record unemployment, others were able to save more money than ever before,” said Mindy Yu, director of investments (and CIMA®) at Stash. “For those in a position to put money away, the unexpected nature of COVID-19 may have served as a wake-up call for folks to start thinking about their financial futures in a more serious way—especially younger Americans.”

Stash saw a 118% increase in 18- to 24-year-olds opening retirement accounts since the start of the year, Yu said.

“What’s more, we’ve seen a nearly 60% increase in 18-24-year-olds using Stash’s automated saving tools since the start of the year—an encouraging indication that Gen Z is thinking long-term, and not getting caught up in short-term volatility,” Yu said.

Read More: COVID Blew Up Everyone’s Plans — Guess Which Generation Is Planning to Retire Even Earlier

Shot of a stressed businesswoman with headache in the office.
Shot of a stressed businesswoman with headache in the office.

The Financial Impact of COVID-19

“Like millennials and the financial crash of 2008, COVID-19 will blunt Gen Z’s finances and outlook for years to come,” Molnar said. “According to the Institute for Fiscal Studies, under 25s were 2.5x more likely to have been working in a sector adversely affected by the lockdown. Many have already reported that the pandemic has made them reassess their spending, making cuts and prioritizing savings.”

“They remain socially-minded, and have tried to buy direct from small brands during the pandemic,” Molnar continued. “A backlash against privilege and the elite is growing, and influencer culture will be drastically altered because of it. Aspirational imagery and elitism have quickly become dépassé. Eighty-nine percent believe it’s necessary for brands to do something to help with Covid-19.”

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This article originally appeared on GOBankingRates.com: A Look at Gen Z’s Financial Habits, From Spending to Saving and More