Millennials Vs. Gen Z: Key Differences In How They Spend Their Money

While some may still think of millennials as a young generation, the truth is, those at the upper end of that generational range are now in their 40s. Instead, the new kids on the block are Gen Z, a group whose youngest members are still in elementary school but whose oldest members are college graduates. These are just a few of the differences between the two generations. 

According to the Pew Research Center, other facts that distinguish Gen Z from millennials is that they are more ethnically diverse, better educated, and more apt to embrace societal change, including gender fluidity, than previous generations. Gen Z and millennials also cannot seem to agree on their fashion choices, and as Inc. points out, while Gen Z embraces Instagram just as enthusiastically as millennials, they aren't about to make food choices based on how well something photographs. 

While fashion and menu trends may not be the most weighty of matters, there is one difference between Gen Z and millennials that may well play a significant role in shaping the future: Their attitude towards personal finance.

Millennials may be more indulgent

As business blog SalesForce point out, millennials and Gen Z have grown up in two entirely different worlds. Millennials likely grew up with more privilege due to having been raised at a time when the economy was chugging right along. Many Gen Z kids, on the other hand, were not even around when the 2008 recession hit hard. This has naturally given them a more realistic attitude towards money, in that they never really expected to have all that much of it. This may have given them an advantage during the pandemic, as it's not hard to lower your expectations when they never really got too far off the ground.

Gen Z, as Business Insider sees it, also benefits from having been raised by pragmatic Gen X parents rather than indulgent boomers. As a result of their upbringing, many millennials still seem to feel they deserve to be out there living their #bestlife and dropping their last dime on a dream vacation. Gen Z, on the other hand, are practically turning #thrifting into an Olympic sport, seeing who can come up with the cutest outfit while spending the least amount of money (via Refinery29).

Gen Z plans to do whatever it takes to get ahead

If you ask any kids or teens what they want to be when they grow up, you're going to get a wide variety of answers ranging from fashion model and NBA star to TikTok influencer. One thing most youthful dreams have in common is the desire to be both rich and famous. They still believe that these things are possible and are willing to work to make them happen. A report from Morning Consult revealed that Gen Zers aged 18 to 21 in 2019 listed money-making as their main life goal (via CNBC). Earning big bucks was of primary importance to 70% of Gen Zers, while only 60% of millennials prioritized it. Likewise, 69% of Gen Zers said they wanted success above all else, while only 59% of millennials chose this.

Where millennials came out ahead of Gen Zers was with their desire to have families and romantic partners, although the margins were narrower: 60% to 58% for the former and 46% to 43% for the latter. A greater number of millennials wanted to own cars, while more Gen Zers wanted to buy homes. This could be because of that famous millennial wanderlust, because 39% of millennials desired, above all else, to travel, while only 37% of Gen Zers shared this ambition.

Gen Z prefers to save rather than spend

If you want to see a striking difference between the way the generations handle money, hand $100 to a millennial and another $100 to a Gen Z kid. The millennial is more likely to blow it all on a nice meal with a friend at a trendy new bistro. A member of Gen Z, surprisingly, may be more apt to deposit that money in the bank.

As SalesForce explains, millennials are all about the experience. Whether they are dining out, attending a music festival, or just shopping at their favorite boutique (you know, the one with those $60 sustainable cotton t-shirts), they want to enjoy every dollar they spend. Gen Z, on the other hand, wants to know there's more money where that's coming from. When they spend their money, they want to get the most bang for their buck, but there are times they'd rather not shell out any cash at all. In fact, many Gen Zers are already investing their funds, but they're doing so prudently. According to the Financial Times, 80% of these new investors are seeking financial advice before jumping into the market, which is something only 60% of millennials are doing.

Gen Z is wary of student loans

Gen Z may have benefited from millennials' misfortune in one key area. After having seen their older siblings dive deep into debt to finance their name-brand college educations, today's undergrads are a lot more wary about taking on high-dollar student loans. Dayna Bradstreet, assistant director of admission at Boston's Simmons University, spoke with the National Association for College Admission Counseling and told them that today's students, unlike their predecessors, "want to know facts like a school's average starting salary, average indebtedness at graduation, and student loan default rates."

Some Gen Zers are choosing to pass on college altogether, citing that less expensive opportunities for learning are now widely available via the internet. As Tiffany Zhon, a former UC-Berkeley student, told Business Insider, "Why sink yourself into exorbitant amounts of debt when you can learn everything online or learn a specific subject matter at a fraction of the price?" Zhong herself bailed out on college, not to find herself on a beach in Bali (that's so millennial!), but rather to pursue a career in venture capitalism.

Millennials are more likely to be swayed by influencers

While millennials grew up with the internet, they also came of age at the same time it was still evolving. This may be why they retain some of the "gee whiz" attitude (to reboot a truly antique buzzword from analog days) towards big online celebs like the Kardashians. They are also more likely than other generations to buy whatever these mega-influencers are peddling.

Gen Z kids, on the other hand, have never not known the internet as a thing, and the youngest of them don't even remember a world without TikTok. The Mitchell Communications Group explains that these digital natives are more likely to gravitate towards what they refer to as "micro-influencers," those with no more than about 10,000 followers. Creators with smaller audiences tend to be gearing themselves more towards their own particular niche, whether it be a special interest or a specific location. This allows Gen Z to feel more connected than they would be to some remote celebrity with millions of fans.

Gen Z may be giving marketers fits

The whole point of most advertising is to get people to want to buy one particular brand or product in preference to all of the other options available. Unfortunately for the advertisers of today, Gen Z is anything but loyal in their shopping habits. As Business Insider explains, this generation has been shopping online ever since they were old enough to navigate a touchscreen. Shopping online means that you can browse from site to site in search of the lowest prices, best sales, free shipping, and other perks. Even if you fall in love with an item you can't afford, you can scour the web for a cheaper knockoff or perhaps a pre-owned version.

Price, of course, is always an object with frugal Gen Zers. A survey of nearly 2,000 shoppers ages 13 through 21 found that the vast majority — 60% of them — cited price as the number one factor driving their purchases. 18% were more likely to patronize a brand that shared their values, but only 9% were swayed by a brand's use of social media no matter how cute and clever their Twitter repartee. While millennials may have been blamed for killing off everything from paper napkins to McMansions, it seems Gen Z can finally claim a kill of their own: Brand loyalty.