In a rapidly evolving economic landscape, Gen-Z is proving to be more financially literate than often portrayed. Contrary to popular belief, Gen-Z is not only cautious about their spending but also strategic in their financial decisions. From housing to shopping habits, Gen-Z is redefining financial prudence and challenging stereotypes. Financial educator Rakhee Saahu (55) from Lucknow says that many youngsters are frugal spenders. “They don’t fall prey to trends. You will see these big spenders on Instagram reels but reality is not the same. This generation spends money on clothes or daily wear only during sales. They buy some luxury items as an investment. For example, Chrome Hearts, it’s a big buzz amongst youth.”
A research paper (Financial Literacy & Money Management) by Zahrotur Rusyda Hinduan and Muhamed Irfan Agia states that Gen-Z continues to face several significant life events that have influenced how they address financial-related problems and manage their money. It says: “In addition to worrying about their incomes, access to affordable healthcare and higher education as well as poverty is perceived as the main financial-related issues of concern. COVID-19 might also have strengthened the financial-related awareness of Generation Z, as half of the Global Gen Z Study participants changed spending habits during the pandemic.”
Housing Choices
For Gen-Z, homeownership is not the pinnacle of financial success. Unlike millennials, who often view buying a house as a crucial life milestone, Gen-Z prefers flexibility and experiences over long-term commitments. The prospect of managing a house and its responsibilities is seen as a burden. Many prefer renting apartments. This lifestyle choice aligns with Gen-Z’s desire for mobility and new experiences, making renting an attractive option. The costs of homeownership extend beyond the mortgage payments; maintenance, property taxes, and insurance can add up significantly. By renting, Gen-Z can avoid these additional expenses, allowing them to allocate their funds toward savings, investments, or other experiences. Also, renting provides the flexibility to relocate for job opportunities or personal growth, a freedom that owning a house can often restrict. “Owning a house is stressful and scary. To be honest, buying a house in this economy is impossible,” says Laavanya Bharadwaj, (22), a Public Relations Trainee from Nellore.
Smart Shopping
Gen-Z is influenced by social media trends and celebrity endorsements, but instead of splurging on high-end brands, many opt for affordable alternatives, or “dupes,” that offer similar aesthetics and quality at a fraction of the cost. “If it looks the same who cares whether it is the original brand or not, as long as the quality is top-notch. This is the ideology that many kids have,” says Rakhee.
This trend is particularly evident in their use of online shopping platforms and thrift stores. Apps like Depop, Poshmark, and even TikTok have become popular among Gen-Z for discovering stylish yet affordable clothing options. Thrift shopping is cheap and also supports the environment as it promotes recycling and reduces waste.
Financial Literacy
With access to a plethora of financial tools and budgeting apps like Mint and YNAB (You Need A Budget) Gen-Z tracks expenses, sets financial goals, and saves efficiently. The rise of financial influencers on YouTube and Instagram provides free information on stock investments and managing student loans. The financial literacy programs in schools and universities have also contributed. They learn about personal finance, credit scores, taxes, and the importance of savings from a young age. “People have a lot of misconceptions about Gen-Z. The pandemic was the first step to teach us how necessary it is to be financially literate,” says Danika Jibbison (25) a medical student.
Gig Economy
Gen-Z’s financial acumen is further demonstrated by their participation in the gig economy and entrepreneurial ventures. Many Gen-Z individuals embrace multiple income streams — freelancing, gig work, or start-ups. The gig economy offers flexibility and independence, allowing Gen-Z to balance work with other pursuits. Many Gen-Z entrepreneurs leverage social media and digital platforms to launch and market their businesses with minimal initial investment. As they continue to navigate the complexities of the modern economy, Gen-Z’s financial literacy will likely serve as a foundation for their long-term success and stability.
