Gen Zs vs. Millennials: How The Saving Mindset Differs Across Generations 

Do you often find yourself comparing Gen Z and Millennials? Although only a couple of decades apart, these two generations have very different perspectives towards life, shaped by the world they grew up in.

The generational debate continues; whether it’s their stance on politics, work, fitness, or finances, their outlooks differ significantly. The millennial generation, those born between 1981 and 1996, witnessed the great recession and the increasing cost of living and inflation, which shaped their relationship with money. 

Gen Z, born between 1997 and 2012, came of age during the global pandemic. They are more technology-driven about every aspect of their lives, from using small online loans to paying for emergency expenses or choosing telemedicine over visiting a hospital.  

These external factors have shaped how each generation manages money, saves, and spends. In this article, we’ll explore the differences in the saving mindset between Millenials and Gen Z, especially when it comes to their attitudes towards saving and their choice of lifestyle. 

Attitude Towards Saving

Millennials

A high portion of this generation entered the workforce during the Great Recession of 2007-2008. They faced job uncertainty, poor wages and stagnant growth very early on in life. 

For many, their early years were spent crippled by student debt and a sudden increase in tuition fees (something that the generation before them didn’t face). Most millennials had no formal financial literacy training and learnt about saving and investing through experience. 

These experiences have heavily influenced the millennial generation’s attitude towards saving. This is why millennials are generally seen to be cautious with their financial planning. They would rather pay off their debt first before saving. 

They are also more likely to choose long-term, stable saving schemes such as pension funds, real estate investments and savings accounts over more risky investments.

Gen Z

Gen Z have grown up during the internet revolution, where, from an early age, they had access to financial tools, digital literacy and online investing channels. Additionally, the pandemic was a big learning curve for Gen Z, as it taught them about the importance of financial preparedness and emergency funds. 

Instead of working in one stable job like their previous generations, Gen Z prefers multiple income streams. In place of a typical 9–5 job, they are more likely to freelance, take on gig work, and pursue side projects because they enjoy the financial freedom and flexibility that comes with it. 

This generation is often more open to high-risk investments such as cryptocurrency and stock trading, in hopes of a higher return. They also prefer digital platforms to carry out their savings and investment planning and are more to trust a financial influencer on social media rather than a conventional accountant.

Spending and Lifestyle Habits

Millennials

Millennials are more likely to look for new experiences than material possessions. They are more likely to spend on holidays, fine dining and wellness experiences. This lifestyle choice blends perfectly with their more stable and conservative approach to savings and investment. A recent survey has shown that 60% of millennials would spend more on experience than a tangible item. 

As digital natives, this generation prefers online shopping and is comfortable navigating multiple e-commerce platforms for the best deals. They’re also much more open to subscription services, from streaming platforms to gyms, they prefer personalised experiences, married with cost predictability. 

Many millennials also aspire to own a home, but many find it challenging to do so today due to rising borrowing costs brought on by the recent cost of living crisis.

Gen Z

Gen Z is more cautious spenders and would rather buy affordable things over luxury items. You’ll most likely find them shopping at thrift stores, which gels well with their lifestyle mantra of affordability, sustainability and minimalism.

While millennials too are open to renting, Gen Z staunchly prefers it over ownership. They find it to be more flexible and fluid, something that their generation is synonymous with.

They prefer the BNPL (Buy Now, Pay Later) method of payment rather than relying on credit cards and their high interest rates. With easy access to information and a frugal mindset, Gen Z prefers alternate savings schemes and likes taking risks with their investments.

This new generation is also more health-conscious (thanks to the pandemic) than the previous ones. For example, studies have shown that Gen Z is more likely to purchase anti-ageing creams than millennials, as they believe in a concept, termed ‘prerejuvenation’, which is a preventive cure even before a problem arises. 

Attitude Towards Debt/Borrowing

Millennials

Millennials are the generation that came before financial literacy became part of UK secondary education, and this is a primary factor behind why many of them struggle with overspending. Over 44% of millennials use credit cards, overdrafts and personal loans. 

Older millennials are also heavily bogged down with family responsibilities, and with the increasing cost of living crisis, many people are resorting to debt to finance their lifestyle.  

Another factor to consider is that a lot of the older millennials have predominantly used cash for daily expenditures. With society turning cashless, many are finding it difficult to cope with ‘invisible expenses’ landing them in debt.

Gen Z

According to a recent survey, Gen Zs are more likely to take out loans from their parents’ banks with them as guarantors or to have their parents take out loans in their names and then give the money to their kids. Gen Z is sceptical about borrowing and favours alternative loan options. They prefer debit cards, payment wallets and BNPL over high-interest credit cards.

They would also look for co-housing and renting for their living arrangements over paying exorbitant home loans, something the millennials are more partial towards. 

Final Words

According to Darwin, the fittest survive, and each generation, whether millennials or Gen Z, has been significantly influenced by the conditions in which they live. While there is no wrong or right approach, every generation has adopted the financial path that has helped them stay afloat and survive the challenges that they faced or are facing.

For each generation, it becomes difficult to understand the other, but it’s important to keep an open mind and respect individual differences and choices.