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Gen Z and Millennial Money Habits: How is each generation changing the way they spend and save?

BusinessPersonal FinanceGen Z and Millennial Money Habits: How is each generation changing the way they spend and save?
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People Who Came Of Age During The 21st Century Had Some Of The Biggest Experiences economic ups and downs in the history. Namely, millennials and Generation Z have lived through the Great Recession, followed by 10 years of an incredible bull market, then an unprecedented global pandemic and historic inflation. Not surprisingly, these events had a huge impact on how each generation spends and saves.

Future of Finance: Gen Z and how they relate to money
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Gen Z includes anyone born in or after 1997, who is the oldest at age 26, according to Laura Adams, a personal finance expert. Finder.com, Millennials (also known as Gen Y) are the next more senior generation, he said, born between 1981 and 1996 and aged 27 to 42. “Because of the wide age range between the generations, It’s understandable that their spending and saving habits differ greatly.Adams said.

The Spending And Saving Habits That Gen Z And Millennials Share

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Despite their differences, there are some similarities between millennials and Gen Z. For one, both generations prioritize sustainability and eco-friendly brands when shopping, according to Laura Sterling, vice president of marketing for Georgia’s Own Credit Union,

“Both are digital shoppers and prefer brands with a large online and social media presence,” Sterling said, adding that both generations make up a large percentage of online purchases.

They are also skeptical of credit cards and prefer “buy now, pay later” programs.

Additionally, Sterling pointed out that a large percentage of Millennials and Zoomers have side hustles.

“While both generations dislike budgeting, both generations are aware of the importance of saving,” Sterling said. “Student loan debt is the biggest barrier to savings for both Gen Z and Millennials.”

How Gen Z and Millennials Differ From Money Habits

Even though both generations value saving money, Gen Z is far ahead of millennials in how much they are spending. According to Finder’s Consumer Confidence IndexOn average, Gen Z saves $857 per month, while Millennials save $294. Gen Z has an average of $10,062 in savings, compared to $7,165 for millennials.

“The reason that millennials are not as promiscuous as Gen Z is because they have more financial responsibilities,” Adams said. “For example, many own homes, have families and pay high ongoing expenses, such as groceries, clothing, insurance and medical costs.”

Sterling said a recession and an era where families can no longer rely on pensions has made Gen Z more savings-focused.

When it comes to spending, Sterling said Millennials and Gen Z have very similar habits. However, millennials are more likely to spend more for a great customer experience, where Gen Z is more likely to switch to a lower priced option. Additionally, he noted that Gen Z spends heavily on electronics, technology and health/wellness, while Millennials prioritize spending on travel and experiences. In addition, Gen Z is more likely to shop secondhand and resell items. They also have less credit card debt than any other generation.

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This article originally appeared on GOBankingRates.com, Gen Z and Millennial Money Habits: How is each generation changing the way they spend and save?

The views and opinions expressed here are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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