By 2020, Gen Z is anticipated to be the biggest consumer generation, so retailers have a lot to lose if they can’t decode how this spending power operates. For example, Forbes reports that Gen Z is already worth $143 billion in potential spending money, and that number is only increasing.

Likewise to millennials, Generation Z-ers let their friends dictate many of their money habits. Furthermore, they’re greatly influenced by celebrities on social media platforms and YouTube because they are always active on these websites

Interestingly, millennials and Gen Z differ in what gen z spend their money on. For younger members of Gen Z (defined as those born between the mid-1990s and early 2000s), many have no income but still manage to spend money on candy, toys, movies, and video games. For the older Generation Z members who are now in the workforce, they care more about what their purchase choices say about them to others, more than even Millennials did at that stage of life.

Female Gen Zers are especially concerned with choosing brands that reflect their values and image, even if it means paying a bit more. They want to be associated with respected brands that are sensitive to diversity and gender. Male Gen Zers aren’t as concerned about this, but they still focus on products from reputable brands.

In the realm of Gen Z’s personal financial decisions, many patterns mirror their career choices. As per research from the Levo Institute and the Adecco Millennial Economy Report, Gen Z places significant emphasis on securing a job, financing their education, maintaining personal and financial health, and covering post-graduation living expenses as top priorities.

The issue of debt holds immense gravity for Gen Z, as they are determined to evade it at all costs. According to a 2017 study by the Center for Generational Kinetics, one in five Gen Z respondents expressed a firm stance against accruing debt. This cautious approach to debt makes Gen Zers notably risk-averse in their career decisions, surpassing even the caution exercised by millennials. The Adecco report highlights a higher level of concern among Gen Zers regarding the financial burden of education compared to millennials (21% versus 13%.) Given the current student debt amounting to $1.4 trillion, this conservative approach is understandable.

Revealed in the Kinetics study, Gen Zers exhibit a prudent approach to savings, with 21% reporting having opened a savings account before reaching the age of 10. Many Gen Zers have already commenced saving for retirement, and 35% intend to initiate their savings journey in their twenties, showcasing the enduring nature of this prudent savings mindset.

Overall, while focusing on key priorities, what does Gen Z spend their money on seems to revolve around essentials such as education, career advancement, and securing financial stability rather than frivolous expenditures, aligning with their conservative financial approach.

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