5 Things Gen Z Will Spend Money On & Why Marketers Need to Care


With a purchasing power of more than $340 billion, Gen Z is expected to shake up the retail industry.

Gen Zer makes a purchase online

Although many in Gen Z are earning their first paychecks, entering college, or just joining the workforce, studies show that the generation shops and spends money much differently than its millennial predecessor.

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While millennials and past generations were more loyal to brands, Gen Z is more interested in buying products that will give them the best value based on their price. Gen Zers also admit to being more impulsive in their shopping habits than older generations.

A Breakdown of Generation Z’s Spending Habits

When it comes to the total share of spending, Gen Z accounts for an estimated five percent in the U.S., according to Afterpay’s 2021 Next Gen Index. However, that number is expected to grow by 10% by 2030, as most will enter the workforce.

With every age group, generation Z’s spending habits declined at the onset of the COVID-19 outbreak. However, the Afterpay report reveals that Gen Z recovered faster than older generations.

So what are they doing right now? Well, they’re shopping more online — and we’ve got the data to prove it.

2022 U.S. Consumer Trends Report Hubspot data

To learn more about the latest purchasing habits between generations, download our free 2022 U.S. Consumer Trends Report

Online shopping allows Gen Z to discover products from new or small companies they wouldn’t find in person.

Gen Z is leading the trend, with 74% of those 18-24 choosing mobile first for shopping. The number one place Gen Z lives online is YouTube. It’s where they spend their time but also where nearly half (47%) research products they’re interested in purchasing, according to the report. Instagram comes next, followed by Snapchat, then TikTok.

Additionally, this generation is most passionate about buying products from brands that align with their values. We found that 45% of Gen Z have boycotted a business, and 36% enjoy buying products that display their social and political beliefs. Gen Z has the most affirmative opinion on the matter: 51% agree with companies taking a stance. A recent Forbes interview by Jeff Fromm and Arizona University students perfectly captured this sentiment.

Forbes interview reflecting younger generations and their values when choosing between competitors

Another thing we can expect from Gen Z is their reliance on influencers to recommend products.

According to our data, influencer recommendations win out for Gen Z, with 55% of that generation surveyed saying recommendations from influencers are one of the most important factors in their purchase decision. Across generations, only 30% consider influencer recommendations as one of the most critical factors in their purchase decisions.

To help brands market to Gen Z when they reach full purchasing power, here’s what we expect them to invest in over the next year.

5 Things Gen Z Will Spend Money On

generation z spending habits what gen z is willing to spend money on

According to a 2021 Consumer Culture Report by 5WPR, Gen Z is prioritizing electronics, technology, health, and wellness.

Conversely, Millennials and those from older generations prioritize travel and experiences, home goods, and furniture.

Based on additional research, we also found that Gen Z pays special attention to small businesses. They are also willing to wait for a good discount before purchasing and take advantage of buy-now-pay-later purchasing options.

Let’s dive into each category below.

1. Electronics and Technology

Gen Z occasionally splurges on technological experiences, such as video games, that help them have fun. In fact, Newzoo reports there will be 2.95 billion gamers worldwide by the end of 2022 — with a steady growth average of 5.6% year-on-year (YoY) increase.

While you might worry that Gen Z isn’t worth marketing to because they won’t splurge on your products, this age group certainly can be persuaded to make larger purchases that offer fun experiences or improve their daily lives.

But, even though they will invest in higher-priced products, Gen Z will still need thorough convincing before pulling out their wallets. It’s vital for brands targeting Gen Z to create content demonstrating why the age group needs their product, how the product could solve daily boredom or woes, and why it’s better than a competitor’s.

For example, although some consumers might consider Fitbit fitness trackers frivolous, this brand does a great job explaining why its product can be a necessary tool to use within a fitness routine.

what things gen z will spend money on: fitbit fitness tracker

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On social media, Fitbit gives facts about why walking and cardio – two activities the bracelet can track – are important to health. And in a November blog post, Fitbit more deeply connected its product to health needs by discussing how its reporting software could help people communicate better with their doctors.

While Fitbit doesn’t claim its product is necessary for health, the brand shows audiences how the product can help them track their fitness needs and progress.

When a pessimistic or budget-conscious Gen-Z member researches Fitbit, they might find its content informative and helpful. From there, if they’re interested in a healthier lifestyle, they might realize that Fitbit is a credible brand that could help them with their fitness needs.

2. Discounted Goods

Eighty percent of Gen Z surveyed in 5WPR’s report say they will wait for an item to go on sale before buying it.

Why is Gen Z so conscientious about their spending habits? Mounting research suggests that the age groups’ thoughts on money link directly to the economic era they were raised in.

While millennials grew up in more stable financial times, most of Gen Z’s earliest memories took place during the U.S. recession. Much of this generation grew up in highly budgeted households or saw how economic troubles impacted their families.

Meanwhile, a large percentage of millennials and those in other age groups can recollect times when their economy was booming.

Organizations, including the Pew Research Center, say these eras have psychologically molded how each generation thinks differently about money. While researchers believe millennials and Gen Z are money conscious, with the goal of avoiding financial instability, millennials are considered to be “more optimistic” about future finances.

As Gen Z ages, studies and purchasing behaviors hint that they haven’t been able to shake their financial instability concerns. Research shows that the offering needs to be so valuable to them that they can justify purchasing and investing in a product or service.

A recent Business Insider report revealed that a logo regarding clothing doesn’t easily persuade Gen Z. In fact, unlike other generations, brand loyalty is one of the last things they think about when making a purchasing decision. What the generation does focus on is price and value.

In the report, a 20-year-old named Amanda Chermin explained, “I can’t afford nicer brands of clothes – I like to save and would rather have money in the bank than be broke.”

Instead of splurging on the hottest brand from New York Fashion Week, the age group is more likely to purchase cheaper clothing that’s either not from a name brand, on clearance, or re-sold.

Or they’ll buy now and pay later (BNPL).

Millennials are the leaders of the BNPL model but Gen Z is growing the fastest, accounting for 14% of users on Afterpay in the U.S.

80% of Gen Zers who use the software spend it on fashion. However, wellness, beauty, and recreation are other top categories.

80% of gen z use buy now pay later model: afterpay index

Although they aren’t loyal to the same stores and brands millennials zoned in on, Gen Z still feels pressure to buy and wear clothing that’s considered good quality or fashionable. Aside from purchasing affordable clothing, the need to look their best has also led to many in Gen Z to invest in clothing rental services or try-before-you-buy shopping experiences.

Although Gen Z is expected to spend less money on clothing than other generations, researchers believe they still feel pressure to look good in front of their peers. These pressures, which might stem from social media, school, work, or social environments, will still drive the age group to clothing stores or ecommerce sites. While retail marketers should expect shifts in spending behaviors from this generation, Gen Z will still buy clothing that looks good on them, is good quality, and is affordable.

The themes related to clothing purchases are important to remember — even if you aren’t marketing clothing products. As we’ve established, Gen Zers are always looking for a good bargain and won’t use just a brand name to justify a purchase.

Regardless of how popular or well-known your brand is, you’ll still need to highlight why your products are better than cheaper versions from competitors.

Although your logo might not persuade Gen Z to buy your product, you can still use authentic brand trust and popularity to your advantage. Although Gen Z is budget-conscious, they also care about what their peers think of them. This means they might still need to splurge on a product, such as a clothing item if they know that people in their age group have it.

If you’re marketing to Gen Z, consider asking popular influencers or happy young adult customers to discuss your product on social media. An authentic product review will not only build a sense of brand trust, but will also show Gen Z audiences that the product is popular and used by people they follow.

From there, a Gen Z member might research or purchase a product simply because it’s more popular or has better reviews than a cheaper alternative.

3. Health and Wellness

Gen Z mental health is an increasingly popular topic because the mental wellness of younger populations will inform healthcare trends, workforce needs, and future generations’ well-being.

Health and wellness is the second-highest category Gen Z spends on, according to 5WPR’s 2021 consumer report mentioned earlier.

This group seems to be the leader in the wellness movement building over the past few years, which promotes awareness surrounding mental health, ethical food sourcing, and other related wellness issues.

For instance, WSL reported that Gen Zers are more likely to use natural remedies than traditional medications, seven points higher than Millennials. They’re also less likely to eat fast food.

The article also highlights how Gen Z invests more (5% to be exact) in wellness than Millennials, a data point reflected in 5WPR’s 2021 Consumer Culture Report.

4. Small Businesses

According to the 2021 Afterpay Next Gen Index, small business spending has increased more than 260% for Gen Z on Afterpay, 80% higher than Millennials.

small business spending has increased more than 260 percent for gen z: afterpay index

This conscious effort likely stems partly from the recent pandemic, as many small businesses struggled to survive. Just look at the growth of Small Business Saturday as an example.

According to our State of Consumer Report, 60% of Gen Zers chose a product based on it being made by a small business in the past three months.

Most were driven by the ability to build a strong bond between consumers and contribute to the local economy.

Another interesting reveal is that consumers are more willing to share their data with small businesses in exchange for discounts and deals. Another caveat is that brands must share how the information will be used.

This is great news for small businesses figuring out how to reach Gen Z consumers. It’s an invitation to be more transparent about your business and not be afraid to show what’s happening behind the scenes.

5. Education

Another key component of generation Z’s spending habits is education.

While millennials are among the most highly educated age groups, Gen Z is on track to have the highest level of education.

In 2020, the Pew Research Center reported that college enrollment is more likely in Gen Zers than Millennials and Gen Xers at a comparable age. They’re also more likely to have a college-educated parent.

At this point, Gen Z’s shown themselves to start saving for college at a much younger age than millennials.

As members of the generation enroll in college or begin to spend their own money, news outlets have predicted and reported bursts in school-related purchases fueled by Gen Z shoppers.

Aside from purchasing supplies, Gen Z is also likely to invest in courses or educational programs to advance their future earnings.

From 2019 to 2020, Gen Z learners watched 50% more hours of educational content on LinkedIn. They spend 12% more time honing hard skills on LinkedIn Learning than the average learner on the platform.

Many researchers believe that Gen Z’s interest in academia is rooted in their need for financial stability. Many in the age group believe that a good education will lead to a great job with high pay.

As a marketer, it’s important to keep Gen Z’s budgeting and educational goals in mind. This generation wants to learn new things, is saving for college, and prioritizes investments that better their future. You’ll need to convince them that your product is worth buying – even when they’re putting most of their money into a college fund.

As you create your product promotions or campaigns, consider how your product could help or benefit the experiences of someone planning for college, college students, or young professionals.

If your product isn’t specifically geared toward education, your campaigns could zone in on how it could improve a college or work-life experience.

For example, if you’re marketing furniture, you could create a promotion highlighting products that fit in an apartment or dorm room. Or, if you market a clothing company, you could highlight clothing items that could be worn in a job interview in a blog post on your website.

Aside from creating content that links your product to career interests or academics, you can also lean into Gen Z’s need to learn new things by developing educational content that teaches audiences about your industry.

After viewing your educational content, audiences might want to learn more about your product and develop a stronger trust in your brand. Later, if they’re interested in buying a product related to your brand’s industry, they might consider your brand first.

If you want to leverage educational content, keep the age range of your audience in mind. While younger members of Gen Z might be primarily interested in B2C brand content due to their college or high-school age, Gen Zers entering internships or the workforce might value educational B2B content that can show them how to get ahead in their industry.

How to Market to Gen Z Based on their Spending Habits

Based on the research noted above, Gen Z is less likely to splurge on frivolous products or brand names. As a marketer, hearing about these mounting studies might make you nervous.

But, in the long run, the consumer trend of putting value first shouldn’t scare or shock you. It should motivate you to ask, “How can I provide better value to my customers?

Although Gen Z might seem more budget-conscious, this doesn’t mean they won’t buy anything from you. Many of your most frugal prospects will still buy, invest in, or splurge on your brand’s offerings if they seem valuable, help them solve pain points, or provide a positive, memorable experience.

Ultimately, bettering your brand, focusing on the customer experience, and promoting positive company reviews will go a long way with Gen Z and all other audiences.

Editor’s Note: This post was originally published in July 2020 and has been updated for comprehensiveness.

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