Gen Z and Millennials Focus on Experiences Over Savings

Generation Z (Gen Z) and Millennials are changing traditional personal finance by prioritizing experiences over savings, yet showing an early interest in investing.

Financially, Gen Z follows the millennial generation, adopting habits like prioritizing savings, making personal budgets, and relying on peer advice for financial knowledge, according to BBVA. In Spain, digital native women from Gen Z are more inclined toward controlling expenses (29%) compared to men (19%). On the other hand, young men display a stronger focus on future financial planning (45%) compared to young women (39%).

In the United States, Millennials have the highest understanding of investing, with 44% claiming advanced knowledge on the subject, according to the “2022 Investopedia Financial Literacy Survey.” Gen X follows with 37%, Gen Z at 31%, and baby boomers at 26%. About 25% of Gen Z individuals hold cryptocurrencies and stocks, with 10% owning NFTs. Despite confidence in spending and saving, nearly one-third feel they have only basic financial management knowledge.

In Mexico, people from these generations are more hopeful about their financial future, with 44% of Gen Z and 35% of Millennials expecting improvements in the next year, according to Deloitte’s 2023 Gen Z and Millennial Survey. Facing inflation and financial pressures, Gen Z and Millennials are taking on side jobs, delaying major life decisions like buying a home or starting a family, and adopting money-saving habits, such as buying second-hand clothes or avoiding car ownership.

However, many are not engaging in long-term saving or investing to combat inflation. Notably, 44% of non-investing Gen Zers cite a lack of knowledge as the main reason for avoiding investments, according to CNBC. Another reason is their focus on living for experiences, also known as “building a soft life.”

“Soft saving is the soft life’s approach to finances,” according to the Prosperity Index Study by Intuit. This trend aims to enhance short-term comfort, prioritizing work-life balance, travel, and similar experiences. However, data from the US Bureau of Economic Analysis shows a drop in the personal saving rate to 3.9% in August 2023, significantly lower than the 8.51% average seen over the past decade.

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