Although many in Gen Z are earning their first paychecks, entering college, or just joining the workforce, studies show that the generation shops and spends money much differently than its millennial predecessor.
What statistics are showing
When it comes to the total share of spending, Gen Z accounts for an estimated five percent in the U.S., according to Afterpay’s 2021 Next Gen Index. However, that number is expected to grow 10% by 2030, as most will be entering the workforce. With every age group, generation Z’s spending habits declined at the onset of the COVID-19 outbreak. However, the Afterpay report reveals that Gen Z recovered faster than older generations. So what are they doing right now? Well, they’re shopping more online. A 2021 Consumer Culture Report by 5WPR found that Gen Z is now spending 43 minutes more per on online shopping than they did before the COVID-19 outbreak. They (77%) say online shopping allows them to discover products from new or small companies they wouldn’t find in person. Only 38% say they prefer in-store shopping.
5 Things Gen Z Will Spend Money On for 2022
1. Electronics and Tech
Gen Z will occasionally splurge on technological experiences that help them have fun, such as video games. In fact, a 2019 study found that two-thirds of Gen Z men say gaming is a "core component" of who they are. While you might worry that Gen Z isn't worth marketing to because they won't splurge on your products, this age group certainly can be persuaded to make larger purchases that offer fun experiences or improve their daily lives.
But, even though they will invest in higher-priced products, Gen Z will still need thorough convincing before pulling out their wallets. It's incredibly important for brands targeting Gen Z to create content that demonstrates why the age group needs their product, how the product could solve daily boredom or woes, and why it's better than a competitor's.
2. Discounted Goods
Eighty percent of Gen Z surveyed in 5WPR’s report say they will wait for an item to go on sale before buying it. Why is Gen Z so conscientious about their spending habits? Mounting research suggests that the age groups' thoughts on money link directly to the economic era they were raised in. While millennials grew up in more stable financial times, most of Gen Z's earliest memories took place during the U.S. recession. Much of this generation grew up in highly budgeted households or saw how their families were impacted by economic troubles. Meanwhile, a large percentage of millennials, as well as those in other age groups, are able to recollect times where their economy was booming.
3. Health and Wellness
In 2019, a survey found that Gen Z was more concerned with mental and physical health than older generations. Today, that still rings true. Health and wellness is the second-highest category Gen Z spends on, according to 5WPR’s 2021 consumer report mentioned earlier. In fact, this group seems to be leaders in the wellness movement building over the past few years, which promotes awareness surrounding mental health, ethical food sourcing, other related wellness issues.
4. Small Businesses
Since January 2020, small business spending has increased more than 260% for Gen Z on Afterpay, 80% higher than Millennials. This conscious effort likely stems in part from the recent pandemic, as many small businesses struggled to survive. In a June 2021 survey conducted by Sendinblue and CITE Research, 46% of Gen Z consumers said they purchased more from small businesses than pre-pandemic. Most were driven by the ability to build a strong bond between consumers and contribute to the local economy.
5. Education
Another key component of generation Z’s spending habits is education. While millennials are one of the most highly educated age groups, Gen Z is on track to have the highest level of education.
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