Why Gen Z Is More Likely To Spend On 'Little Treats' Than Saving For Future Kids

A quiet but significant shift is underway in how younger people think about money. For Generation Z, financial responsibility no longer means delaying life until a distant future. Instead, this cohort is blending disciplined saving and investing with a strong preference for experiences, challenging long-held ideas about wealth, security, and success that shaped earlier generations.

Money Across Generations

Wealth is being actively redefined with saving vs indulgence habits, technology, and economic uncertainty continue to influence this evolution across generations.

Where Gen X and Baby Boomers prioritise investments in property or gold, asset protection, and long-term security while managing healthcare and essentials, Millennials negotiate between EMIs, financial security, and family expectations.

Focussed on education and stability, these 30-45-year-olds are managing maximum responsibility and financial pressure in the modern age.

In contrast, Gen Z is characterised by impulsively spending and tabling explanations for later.

Gen X and Baby Boomers enjoyed high income satisfaction and practised brand loyalty, spending in a conservative fashion, unperturbed by trends or online stores.

On the other hand, today’s youth aged 15-28 tend to have lower incomes and spending habits highly influenced by social media, and product discovery and engagement done online.

Yet, this spending is far from irresponsible. Gen Z grew up watching millennials struggle during recessions, and they learnt their lessons early on.

They tend to open bank accounts from a young age while saving a fixed amount consistently and tracking their payments digitally. They’re also more likely to compare costs and have concerns about uncertainty, debt, and inflation. A large section prefers investing from the beginning.   

Ari, 20, explains how most of his money is spent on dates with his girlfriend, along with food and commute. “Everything has a subscription,” he explains as he reveals Spotify and Netflix as the next biggest shares of his expenditure. 

This corroborates the strong preference for travel, dining, relationships, health, and experiences observed in this generation.

Furthermore, accounts from Gen Z individuals in the US and UK interviewed by the Guardian also show the same budgeting/tracking habits with selective splurges on subscriptions, etc.

It also reveals that many with low incomes also end up saving a significant portion due to living at home and ‘thrifting’, or buying second-hand.

Differences across Rural vs Urban India

According to a paper titled “Spending and Saving Behaviors of Gen Z: A Review-Based Comparison Between Urban and Rural Youth” by Amrit Horo, an assistant professor at Sido Kanhu Murmu University, Jharkhand, these patterns are not as rigid or universal as one might think.

They write about how urban Gen Z exhibits higher discretionary spending, particularly on lifestyle-oriented categories such as fashion, grooming, entertainment, travel, and e-commerce.

Their consumption patterns are heavily influenced by social media, peer networks, digital marketing, and convenience-driven fintech tools such as UPI, e-wallets, credit cards, and buy-now-pay-later services.

Spending decisions in urban settings are often emotion-driven and closely tied to identity, status, and immediate gratification. In terms of financial literacy and access, urban youth generally benefit from better education, online resources, and peer learning, resulting in higher financial awareness.

In contrast, rural Gen Z prioritises essential expenditures, including food, education, and mobility. Their spending choices are shaped by family involvement, community norms, and a culture of thrift, resulting in more cautious and necessity-based consumption.

They continue to face disadvantages due to limited access to formal financial education, digital infrastructure, and reliable investment information and remain hesitant or confused about digital financial tools. Technology further accentuates these divides.

Urban Gen Z is highly fintech-savvy, using digital platforms for payments, budgeting, saving, and investing, while rural adoption remains slower due to connectivity gaps, trust deficits, and fear of fraud. 

Rural Gen Z demonstrates greater consistency and discipline in saving, driven by income uncertainty, limited access to formal safety nets, and a strong cultural emphasis on preparing for future risks.

Traditional saving instruments such as post office schemes, fixed deposits, and self-help groups remain dominant. Urban Gen Z, despite higher earning potential and access to modern financial tools like SIPs, savings apps, and digital wallets, tends to save a smaller proportion of income due to higher lifestyle expenses.

Across both contexts, savings propensity increases with age, while higher education levels and female gender are associated with relatively lower savings, reflecting the pressures of urban professional lifestyles.

As these differences persist and more patterns emerge, one thing is certain. With millions of young consumers and nearly half of India’s spending power, Gen Z is changing how money moves.

Caught between rising living costs, student debt, and economic uncertainty, many young people are choosing a more flexible, present-focused approach to money: balancing saving with quality of life, mental well-being, and personal growth.

The question then is not whether they save enough or whether they are trying to “get rich quick” but rather what does it mean to possess wealth in the first place. 

Views expressed by the author are their own.