Why Millenials and Gen Z are Changing their Spending Habits

The episode explains why Millennials and Gen Z are shifting spending away from luxury brands and big-ticket debt like houses and cars, and toward security, savings, and experiences. It cites major shocks shaping their mindset— the 2008 financial crisis, COVID in 2021, and global conflict in 2026—making the future feel unpredictable and pushing them to view money as safety rather than status. Rising costs of living and essentials like housing, education, and healthcare further drive prioritization of financial stability. The script also highlights skepticism toward advertising, with young consumers relying on reviews, ratings, and online analysis, demanding authenticity and transparency. Overall, they are becoming strategic spenders, focusing on investments such as stocks, mutual funds, and index funds, plus technology and education, redefining success as freedom and flexibility.

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Podcast: Better Than yesterday by Sunil Gera
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Hi, I’m Sunil Mohan Gera.
I’m passionate about exploring ideas that help people live better — whether it’s through financial freedom, personal growth, health, or lifestyle choices. On Better Than Yesterday, I share insights, stories, and practical tips to inspire you to grow every day and create the life you want. 

Transcript

SPEAKER_00 0:00

Hello, I'm back on my channel better than yesterday. Today's topic is why millennials and Gen Z are changing the spending habits. There's a time there are more opportunities, the more markets are opening. Millennials and Gen Z are doing very well financially, which has never happened in past history. But what is happening? The brands are confused, the financial markets are absurd. Why? When they expected that Gen Z and millennials would spend more on branded products, more on luxury goods, more on houses. But it's strange not happening that way. I'll give you some examples. People started pulling houses in their 20s. But today, many millennials in Gen C are struggling because they are not in a position to think about booking houses when they are spending a lot of time in learning new things, in getting better education, in possibly paying their education loans, and now they are in their 30s or 40s when they think about owning the houses. Now, the question is why millennials and Gen Z are changing money habits. There are five forces which are influencing Gen Z and millennials. Many of them had just passed out from their colleges, and as they were about to enter into the market for jobs, the jobs disappeared. The markets changed. The housing went in big recession. Then in 2021, COVID happened. Again, the job is banished. Lot of young people with good degrees who expected good jobs were jobless. Then now in 2026, all three started, which also adversely affected the financial markets. Future is totally unpredictable. So for millennials and Gen Z, though they have a lot of new opportunities in job marketing, yet they are careful. They learn the lesson that money equal to security and not status. Branded watches like Roma, perfumes like channel cars, these bands, PMW, and vacations to French devare of something which were done by their previous generations, by Gen Z, by Gen X, or by baby boomers have done. Now, the mindset of Gen C and millennials is that make money work for them. They have learned that by proper investments the money can work for them. Another shift has changed the lifestyles, their financial habits. Shift in the definition of happiness. They don't 15 years EMIs for housing, seven years EMIs for cars. They have reduced their impulse purchasing, like products like Roma watches, Channel Perfumes, Lucy, Louis Vuitton, and they care more about the experience. They spend more on experiences which provide them a lot of happiness. It could be playing piano in a concert, trekking, hiking mounted resort, spending happy time with their family, enjoying side by side. Not only thinking about the pressures, financial pressures, future uncertainty, but caring about the moment, the happiness which they derive in at present. Another force which has interest them is cost of living explosion. In cities like London or Bombay in India, the houses have become very the houses which where the rent was possibly 20,000 rupees 10 years back has hiked up to 50,000, 60,000. So if a person in a city like Bombay is having a net income of two and a half lakh rupees per month or say 30 lakh rupees annually, has to spend close to about 60,000 on housing alone for vacation. It could take maybe five, six lakh rupees per year for three vacations in a whole year because the work are very great, long-working hours, they are not in a position to sufficiently spend time with their near and dears. So a break after what four months during festival time or during suitable season, outings are very necessary. Then education has become very expensive. Education of two children may cost them, and good schools may cost them maybe what one and a half lakh rupees per month. So the rising cost of education, housing, healthcare, young people are prioritizing. They are prioritizing on saves and funds on financial stability. The next force which is being influential is skepticism towards brands. James doesn't believe in advertising so much. If suppose they want to go out for a restaurant, they check what are the reviews. Similarly, if they buy a watch in computer or computer peripheral, they check what is the rating, whether it is 4.5 or 5 or it is 3.5, then they also learn about YouTube analysis, online discussions. They understand that the brands must be authentic and transparent. They do not blindly buy a product. They first check how's the rating, how particular airline have treated their passengers, or suppose they have to buy import a product, they check that how the delivery was made. They don't believe in not spending, but they have become strat spenders. They want to have the savings to take care of the uncertainty when the jobs may disappear. If his job disappears, it affects him and his family. So he has to put sufficient savings so that even if it takes three months, four months' time for him to get a suitable job, it should not affect his life. He should be in a position to keep paying for his rent, for education of his children, for his requirement for food, for his well-being, without being unduly worried. So they don't jump to buying symbols like Mercedes, Vence, Holiday in French Rivera or perfumes like channel, alcohol. They spend more on experiences, technology, education, and self development. Experience could be cruise. Technology means computers, peripheral softwares. Education could be some useful courses on AI, and self-development could be able to get an opportunity to be a tech speaker studying Excel and online classes so that the education helps in how to move in the future, how to become relevant. So the big economic shift has taken place. Millennials and Gen Z are strategic spenders. They are reshaping the global economy. They are learning to spend on stocks, mutual funds, index funds, through companies like Zeroda. Younger generations redefining success. Wealth is freedom and flexibility. Financial independence is important more than status. The mindset may reshape global economy. Gen Z want load of EMIs, more savings, only work for them, like rental income or the investment in mutual funds, index funds, education. So the financial markets should lie. Gen Z and millennials are changing the rules of spending. They are strategic thinkers and they are affecting the future markets. I'm sure that you would enjoy listening to my podcast. Please subscribe for my channel, press the subscribe button, and come up with another valuable podcast in a couple of days' time. See you then. Thanks very much.