- Generation X (Gen X) and Generation Z (Gen Z) are often overlooked when comparing generational financial trends.
- Today’s teenagers, called Gen Z, are more frugal about their spending than their Gen X parents.
- Gen Xers are known for being the biggest spenders across all demographics.
Every generation has something that defines them. Whether it’s the historical events that influenced their worldview, the technology that blew their minds, or the types of jobs they held in early adulthood; it seems every generation has something that feels uniquely theirs.In the age of digital marketing, the ways that each demographic spend their money has become yet another major characteristic that distinguishes generations from each other. But while contention between Baby Boomers and Millennials has repeatedly been the center of the intergenerational debate about finances, Gen X and Gen Z have pretty much been on the sidelines when it comes to identifying spending habits.Gen X is sometimes jokingly called the middle child generation because of how often they are overlooked. According to The Pew Research Center, this group consists of people who were born between 1965-1980. Currently, they make up 20.6% of the US population, which makes them smaller than any other demographic.On the other hand, Generation Z – not to be confused with their Millennial older siblings – is made of everyone born after the year 1995. At nearly 27% of the population, they dominate the other generations in terms of size. Many people refer to them as digital natives because they have never known a world without mobile technology like smartphones.When it comes to money, there are many areas where these generations unite against the Millennial demographic between them. For example, both Gen x and Gen Z have been described as being risk-averse and cautious when it comes to decision making, due to having lived through tough economic situations. (Remember Adult Gen Xers and their Gen Z children felt the financial crash of the late 2000s.) This is quite different from Millenials, who have been widely regarded as outspoken and daring.But even though Gen Xers have certainly had a strong influence on the financial attitudes of their Gen Z kids, there are still some significant contrasts in their spending habits across the board.
Both Generation X and Gen Z tend to spend a lot of money on food.
In April 2018, Sarah Whitten of CNBC reported on Piper Jaffray’s biannual Taking Stock With Teens study, which found through surveying 6,000 teenagers that 24% of their cash was spent on going out to eat, primarily at Starbucks and Chipotle. Similarly, a 2017 survey by Charles Schwab reported 66% of Gen Xers say they regularly spend money on eating at the ‘hottest restaurant’ in their towns. And they aren’t afraid to go all out when they do. Marketingcharts organised data from the latest Consumer Expenditure Survey and revealed Gen X spends about $US4,229 annually on food outside the house.
But Gen Xers are generally willing to spend more than Gen Z to cook their own meals.
Acosta’s The Why Behind the Buy study from earlier this year on grocery spending habits found Gen Z spends the least on groceries. They averaged a grocery bill of $US269 per month over roughly 4.5 trips through a single month. Perhaps this has to do with their age and limited income, but their strong preference for dining out at restaurants could also play a role.However the average Gen Xer spends a whopping $US380 on grocery trips per month. And that’s even after looking for bargains. The study notes 70% of these shoppers will use a coupon app or some form of savings reward program when shopping at the supermarket.
Gen Z tends to pay a premium for health-conscious, ethically sourced food.
A Nielsen study found 75% of Gen Zers are willing to pay more for what they term “do-good” food. This basically means food that’s been certified as organic, fair trade, locally grown, vegan, or gluten-free. Similarly, Gen X folks are also willing to pay a little more for the healthier labels, though it isn’t their number one concern.
Gen Z, in general, is more confident about the money they’re spending on their saving plans.
That same Nielsen study found 32% of Gen Zers report stashing away enough money in their savings per month to make them feel confident. This was nearly 10 percentage points higher than their Gen X elders, where only 23% reported putting away money every month and feeling good about it.
Gen Z tends to not care about brand loyalty when shopping, but Gen X still does.
In 2015, eMarketer conducted a survey of approximately, 1,200 adults over 18 and found Gen Xers to be the most brand loyal consumers. It could be linked to the fact that they are known to heavily research something online before they buy it. Once they have found something good that they like, they see little reason to try something new.It takes a lot more to win over a Gen Zer. The National Retail Federation reports roughly 60% of today’s teens demand that brands be socially or ethically conscious for them to earn their trust. And be sure not to mess up – 52% Gen Zers will easily move on to a different brand the product they use even slightly dips in quality.
Gen X has been dubbed most likely to spend on financial vices amongst all the generations.
A Bankrates survey noted that Gen Xers spend, on average, more than $US3,000 on things that fall under the not-good-for-you category. This includes fancy coffees, takeout, and gambling. Data from the Bureau of Labour Statistics supports this assertion. The latest Consumer Expenditure Report shows this generation spends the highest dollar amount on alcoholic beverages overall.
Gen Xers tend to like buying nice wine; Gen Zers probably see it is a waste.
A 2018 study by Wine Access study found Gen Xers spent more than any other generation on wine, including wine club memberships. And while it seems like Gen Zers can’t compete here since most of them are below the drinking age, one could argue they’re on track to spend less on drinking than their Gen X parents. Several reports have illustrated a decline in adolescent alcohol consumption compared to the previous years. This suggests the future is filled with more people choosing to stay sober, and consequently, spend less on booze.
Gen-Z women seem to spend the most on beauty products.
WWD reported this year that Gen Z women are more willing to buy quality makeup, skincare, and hair products than clothes. When asked to name their favourite places to go shopping, Gen Z included two of the most popular beauty retailers – Ulta and Sephora in their top five.On the other hand, Gen X women rank third when it comes to cosmetic spending. In 2015 the TABS Group annual Cosmetic Study revealed they rank third in terms of cosmetic spending, despite their massive buying power.Part of it may be explained by Gen Xers recently criticising beauty marketers for not being cognisant of their needs as an ageing demographic.
In any case, spending still remains strong across all age groups and doesn’t seem to be changing any time soon.
It appears that Gen Xers can’t get enough of online shopping.
You would think growing up with digital technology and an instant gratification mindset would make Gen Zers the top spenders here, but nope. It turns out Gen X folks are the most likely to buy items from major online retailers like Amazon, according to a report by Convenience Store News.Interestingly enough, a study by Fluent Commerce suggests Gen Z appears to be leading a revolutionary return to brick and mortar shopping. The study notes 73% of them eagerly looking forward to the full ‘experience’ of shopping. Except there’s one caveat – their definition of ‘in-store shopping’ may be different from other generations. Of Gen Z, 66% claim they want to have the ability to order ahead and pick up their products instead.
In general, Gen Xers are considered deliberate overspenders, while Gen Zers are cautious savers.
The bottom line is Gen Xers aren’t afraid to enjoy the finer things in life. For example, a 2018 infographic published by the Vacation Confidence Index found 13% of Gen Xers tend to overspend during their vacations by a whopping $US836, on average. It shouldn’t be so surprising to learn they also have the highest level of average debt when compared to the other generations.The good news is Gen Z tends to be a bit more pragmatic. While many of them are interested in saving for travel and other future experiences, it isn’t at the top of their spending list. A 2017 survey by Lincoln Financial Group found 71% of teens see investing their money in their futures to be a top priority. Travel was surprisingly ranked near the bottom of that list, according to the survey data.
Visit INSIDER’s homepage for more.
Business Insider Emails & Alerts
Site highlights each day to your inbox.