What Are the Top 3 Categories That Gen Z Spends Its Money On?
Explore how Gen Z allocates their money. Understand their unique financial priorities, motivations, and the values shaping their spending.
Generation Z encompasses individuals born roughly between 1997 and 2012, making them currently between 12 and 27 years old. This demographic cohort grew up entirely immersed in the digital age. Their formative years were shaped by significant global events, including the Great Recession and the recent pandemic, which instilled a pragmatic approach to finances and an awareness of economic uncertainty. This unique upbringing has profoundly influenced their financial behaviors and consumption priorities as they enter adulthood and the workforce.
Experiences and Leisure
Gen Z allocates a substantial portion of their disposable income towards experiences rather than material possessions. This preference is evident in their spending on activities such as travel, concerts, festivals, and dining out. Over two-thirds of Gen Z travelers in the U.S. report allocating between 20% and over 40% of their disposable income to vacations.
Travel is a high priority, with Gen Z taking an average of three leisure trips annually and prioritizing transportation to desired destinations. Many are budget-conscious, opting for hostels or shared accommodations, yet they are willing to spend generously on unique local experiences like street food tours or art workshops. This generation is a dominant force in live music spending, leading all age groups in monthly concert expenditures, averaging $38 per month in Q2 2024. Their commitment to experiences leads some to pay premium resale prices for concert tickets, with some spending over $2,100 in the past two years.
Digital Content and Technology
Gen Z’s identity as digital natives translates into considerable spending on digital content, services, and technological gadgets. They are the most heavily subscribed generation in the U.S., paying for nearly seven services each month, costing them an average of $940 annually. Music applications are particularly popular, with nearly 60% subscribing to at least one music service.
While streaming video services are widely used, Gen Z prefers music subscriptions, which outrank video streaming as their most popular paid service. Gaming subscriptions also hold significant appeal, with almost half of Gen Z paying for services like Xbox Game Pass or PS Plus, nearly double other age groups. Beyond subscriptions, this generation’s spending on technology includes new smartphones and gaming consoles. However, recent data indicates a notable shift, with Gen Z’s weekly spending on video games dropping by nearly 25% compared to the previous year, possibly due to economic challenges or a preference for free-to-play options.
Food and Beverages
Spending on food and beverages is a significant category for Gen Z, marked by a strong inclination towards convenience, social dining, and trendy options. They frequently patronize fast-casual and quick-service restaurants, making 4.3 billion visits to such establishments annually. This generation often opts for these dining choices due to value, speed, and customization.
Gen Z distinctly prefers food delivery services, using third-party aggregators four times more often than older generations. Nearly two-thirds of Gen Z regularly use food delivery apps for quick service, convenience, and personalized recommendations. Social media significantly influences their food choices, with many seeking “Instagrammable” meals or trying trendy new flavors like “swicy” or “swalty” profiles. Despite economic concerns, this generation prioritizes dining experiences, with many considering themselves “foodies” and willing to spend on quality ingredients and innovative menus.
Underlying Spending Motivations
Gen Z’s spending patterns are rooted in their emphasis on authenticity and values-driven consumption. They prioritize brands that align with their personal values, such as sustainability and social responsibility, and support companies with trusted ethics. They seek transparency and genuine connections with brands, beyond just affordable, high-quality products.
Social media plays a pervasive role in their purchasing decisions, as a vast majority report social media influences their buying choices. Influencers, especially micro-influencers, are highly trusted, with nearly 75% of Gen Z consumers relying on social media for purchasing decisions. This influence extends to product discovery, with many finding new brands through social media content and ads. Their financial management is pragmatic, focusing on budgeting for experiences and using “Buy Now, Pay Later” for larger purchases like concert tickets or travel.