As Generation Z (Gen Z) emerges into adulthood and Millennials navigate further into their careers, a distinct contrast in financial habits and interests becomes apparent, shaped by evolving societal norms, technological advancements, and economic realities. Explore the similarities and differences between these two generations when it comes to financial interests.
Gen Z are people born roughly between 1997 and 2012
How is Gen Z different from millennials when it come to spending pattern?
One of the most striking differences between Gen Z and Millennials lies in their spending patterns. Millennials have been characterised by a penchant for experiences over material goods. This generation came of age during economic uncertainty, witnessing the dot-com bubble burst and the 2008 financial crisis, which significantly shaped their financial ethos.
Conversely, Gen Z has grown up in a digitally connected world where information and entertainment are readily accessible. This generation tends to prioritise technology and sustainability in their spending choices. They are known for their preference for experiences as well but often seek experiences that are enhanced or mediated by technology.
Vijay Valecha, Chief Investment Officer of investment company Century Financial said that spending habits are massively influenced by the economic and geopolitical situation that both generations experienced.
The economic environment has significantly shaped the financial decisions of both generations. Millennials grew up during the economic boom of the 1990s but faced the Great Recession (2007-2009) in their early adulthood.
“This led to cautious spending but a desire for immediate gratification through experiences. Gen Z, having witnessed economic instability from a young age, including the 2008 financial crisis and the Covid-19 pandemic, has become more financially conservative and future-focused.”
Dr Jelena Janjusevic, Associate Professor of Finance at Heriot-Watt University in Dubai also raised a similarity evident in both generations’ spending patterns.
“Technology also plays a central role in their spending patterns. Online shopping, mobile payments, and digital wallets are common tools for both groups, who favour the convenience and speed offered by these methods.
“Additionally, subscription services, such as streaming platforms and meal delivery kits, are popular among both Gen Z and Millennials, catering to their desire for convenience and immediate gratification.”
Rakan Khalifa, 28-year-old founder of technology company, Gamechanger Worldwide Organisation, spoke to Gulf News about the difference in spending preferences in diverse aspects.
“Moreover, the way each generation views education and shopping also differS. Gen Z is skeptical about the traditional educational pathways that Millennials pursued, which often led to substantial student debt without commensurate job prospects. They are more open to alternative education methods that may provide better or more direct career preparation.
In shopping, Gen Z values convenience and technology-driven experiences like one-hour deliveries and in-store kiosks over brand loyalty, which contrasts with the Millennial's lesser emphasis on technology in their shopping experiences
What kind of investment trends interest each generation?
When it comes to investments, both generations exhibit a cautious yet distinct approach. Millennials, scarred by the 2008 recession, tend to favour safer investment vehicles such as index funds, mutual funds, and real estate. Their financial decisions are often influenced by a desire for stability and a long-term view of wealth accumulation.
In contrast, Gen Z shows a propensity for more forward-looking investment strategies.
Khalifa also added some insights about the financial outlook of both generations.
“Financial outlooks between the two generations also diverge significantly. Gen Z appears to be more financially literate and proactive from a younger age than Millennials.
“A study found that 64 per cent of Gen Z had already begun to research or discuss their financial futures by age 13, and those who had were overwhelmingly optimistic about their financial prospects. Another reason why major investing books and courses online and being sold and bought more than ever before.”
Adding on to the idea of the cautious approach, Valecha said, “Millennials are known for actively saving for retirement. They have a longer time horizon for their investments and often follow traditional saving patterns.
“Investing in real estate is common among Millennials, who view homeownership as a critical financial goal and a symbol of stability. Although not digital natives, Millennials have adopted financial technologies like robo-advisors and investment apps, though at a slower pace compared to Gen Z.”
There is a difference when it comes future financial planning, Valecha said, “Gen Z, however, has started saving for retirement and other long-term goals much earlier. They are cautious and prefer building a safety net before making substantial expenditures.
“Cryptocurrencies and fractional shares attract Gen Z investors, who are more willing to explore non-traditional investment avenues. This reflects their adaptability and comfort with digital platforms.”
Tarek Abdalla, senior vice president, Chief Marketing Officer CEMEA at digital payments company, Visa, said that it is essential to understand that Gen Z is not simply millennial 2.0. He said the younger generation has higher expectations from brands than any generation before.
He said, “Gen Z holds significant future spending power, which makes strategic partnerships and technology essential for reaching this demographic. In the UAE specifically, Gen Z already possesses strong purchasing power, due to factors such as a high employment rate and steady income.
“They’re also an investment-savvy segment, and nearly a third reflect an entrepreneurial spirit. Only 12 per cent carry personal debt, which is significantly lower than the regional average of 25 per cent.”
What are the factors influencing their financial decisions?
The factors influencing financial decisions for both Gen Z and Millennials are multifaceted. Economic conditions, upbringing, and technological advancements play pivotal roles in shaping their financial behaviours.
For Millennials, the experience of economic downturns has instilled a sense of caution and a focus on financial security, explains economist David Martinez. This cautious approach is reflected in their preference for stable investments and delayed milestones such as homeownership.
On the other hand, Gen Z's financial decisions are significantly influenced by technology and social awareness. The immediacy of information and trends on social platforms has heightened their awareness of sustainability issues and ethical consumption, influencing their spending and investment choices.
Khalifa spoke about the implications of the digital age on both generations. He addressed how millennials are the pioneers of the digital age. They witnessed the rise of the internet, social media and all available high-tech software that we now consider a casual occurrence. He said that the experience is completely different for Gen Z, they are digital natives with no prior knowledge of life prior to the internet.
“This made the “click, click INVEST” applications go up in scale!,” added Khalifa.
“One striking difference is in the realm of attention spans and multitasking. Generation Z, accustomed to rapid-fire apps like Tiktok, Instagram and Snapchat and constant updates, tends to have a shorter attention span compared to Millennials. This trait, however, translates into superior multitasking capabilities, allowing them to switch between tasks with ease and efficiency.”
“For instance, it’s not uncommon for someone from Gen Z to simultaneously work on a school assignment, conduct research on a tablet, and interact on social media. And by default, the long lectures of investing and the longevity of investing in the stock market is not as excited for them because they want something faster ‘trading wise’,” said Khalifa.
Supporting Khalifa’s insights was Damian Hitchen, CEO of Saxo Bank MENA. He spoke about how Gen Z is more inclined to towards innovative and digital investment platforms.
They show a strong preference for cryptocurrencies, fintech solutions, and other digital assets. Gen Z investors are also more likely to use mobile apps and online platforms for their investment activities, reflecting their comfort with technology.
“Additionally, meme stocks have become a significant trend among Gen Z. Driven by social media platforms like Reddit and TikTok. Gen Z investors often engage in community-driven investing, targeting stocks that gain viral popularity.”
“This trend is characterized by high volatility and a higher risk tolerance, aligning with Gen Z's appetite for high-risk, high-reward opportunities.”
What are their similarities in spending habits?
Despite their differences, Gen Z and Millennials share some common ground in their spending habits. Both generations allocate a considerable portion of their income to education and healthcare expenses. Student loan debt remains a significant financial burden for Millennials, affecting their spending and saving capabilities.
Moreover, both generations prioritise experiences over material possessions to a certain extent. These shared preferences underscore a broader societal shift towards valuing experiences and personal fulfillment over traditional markers of success.
Janjusevic spoke specifically about this point. “Despite the differences in the financial landscape and investment preferences between Gen Z and Millennials, there are notable similarities in their spending habits. Both generations prioritise experiences over material possessions, valuing travel, dining, and entertainment.
“This shift reflects a broader cultural trend towards living in the moment and seeking fulfilment through experiences rather than accumulating goods.”
Valecha also mentioned a similarity in spending patterns between generations. “Both leverage technology for financial management, though Gen Z does so to a greater extent. They both value ethical consumption, though Gen Z is more pronounced in their commitment to sustainability.”
Janjusevic talked about financial awareness and discussed how it is another similarity between both generations.
“Financial awareness is another commonality. Both generations show a keen interest in budgeting and personal finance management, often utilising apps and digital tools to track their spending and savings.
“This focus on financial literacy and responsibility reflects a cautious approach to money, influenced by witnessing economic downturns and uncertain job markets.”
How is the financial landscape evolving?
As Gen Z comes of age and Millennials continue to influence economic trends, the financial landscape is evolving with distinct generational footprints. While Millennials exhibit a cautious approach shaped by economic adversity, Gen Z embraces technology and social consciousness in their financial decisions.
The differences in spending, savings, and investment habits reflect broader shifts in societal norms and technological advancements. Understanding these generational dynamics is crucial for financial institutions, marketers, and policymakers seeking to navigate and leverage the preferences of these influential demographic cohorts.
As financial behaviours continue to evolve, the interplay between economic conditions, technological advancements, and generational values will shape the future of personal finance for Gen Z, Millennials, and generations to come.
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