With Gen Z expected to become the largest generation of consumers by the year 2020, there is a lot at stake for retailers to figure out how this somewhat mysterious generation spends money. According to Forbes, they are already worth $143 billion in spending power and that number is only going to go up.
Similar to millennials, Gen Zers are definitely influenced by their peers when it comes to spending. They are also very influenced by personalities on social media as well as YouTube as they are so deeply embedded in these.
What really gets interesting though is how millennials and Gen Z differ from each other in what they choose to spend their money on. Now for the younger members of Gen Z—Gen Z is defined as those who were born between the mid-1990s and the second decade of this century—many of them are still minors who have no income so most of their purchases are in the candy, toys, movies, video games category. But for the older Gen Zers, those in the workforce, they are actually the most concerned about which brands they buy and what it says about them, more so than the generation that preceded them (Millennials are in their mid-to-late 20s and 30s.)
According to Forbes, Gen Z focuses on products from respected brands even if it means paying a bit more. They are very concerned with the image they are portraying so this means choosing brands that are sensitive to diversity and gender. Female Gen Zers are especially prone to do this more so than their male counterparts.
In a way, Gen Z approaches their spending choices like their careers. In research conducted by the Levo Institute and the Adecco Millennial Economy Report, it was found that Gen Z looks at finding a job, paying for their education, obtaining personal and financial health, and paying for a place to live on their own after graduation as very high priority.
Debt is a super serious topic for Gen Z and they do not want to be burdened by it. According to a 2017 study by the Center for Generational Kinetics one in five Gen Z respondents said debt should be avoided at all costs. This is why Gen Z is very averse to risk in their careers, more so than millennials. The Addecco report found that Gen Z is more concerned about the cost of education than their millennial counterparts (21% versus 13%.) And with the current state of student debt weighing in at $1.4 trillion, it is no wonder they have this attitude.
To avoid debt Gen Zers have been actively saving with the Kinetics study citing that 21% of Gen Z respondents have had a savings account since before they were 10 years old. And this savings mentality is staying with them as Gen Zers have already started saving for retirement and 35% say they plan to start saving in their twenties.