Half of Gen Z Overspends Compared to Just 12% of Boomers — How Can They Break the Cycle?
When you live in a consumer culture, it's easy to get sucked into overspending, so it's not too surprising that over a quarter of Americans (27%) admit they spend too much, a recent survey from Clever Real Estate found.
However, there is a notable generational divide: About 49% of Gen Z said they're overspenders, compared to just 12% of boomers. The gap may also help explain why so many young adults struggle with debt, savings and achieving major financial milestones.
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Here's a closer look at what's driving the divide and what Gen Z can do to break the cycle.
Why Gen Z Is More Likely To Overspend Than Boomers
The main reason Gen Z is far more likely to overspend than boomers is that the two generations are at very different life stages.
"Boomers are retired or nearing retirement and are living on a fixed income," said Jaime Dunaway-Seale, data writer at Clever Real Estate. "They tend to be more cautious with their spending and have had decades to learn good money management habits."
Meanwhile, Gen Z is still figuring out their finances while navigating pressures previous generations never faced.
"It can be difficult with constant exposure to what everyone else is buying, wearing and doing on social media — something boomers never had to contend with at the same age," Dunaway-Seale said.
"On top of that, Gen Z is coming of age at a time of high inflation and an extremely expensive rental and housing market," she continued. "Spending money on nonessentials doesn’t seem so irresponsible when other life goals, such as buying a house and retiring comfortably, seem so unattainable anyway."
What's Causing Gen Z's Overspending Problem?
Gen Z may spend more than it can afford because many young adults believe money is tied to happiness: The survey found that 56% of Gen Z believes that money can buy happiness.
"That mindset makes it a lot easier to justify spending instead of saving," Dunaway-Seale said. "Despite spending more, half of Gen Z (50%) still feel guilty about their spending, showing that spending more isn't bringing the satisfaction they're chasing."
At the same time, overspending has become easier. Credit cards, buy now, pay later services and constant digital shopping opportunities can make it difficult to resist temptation.
Many Gen Z adults are also earning low entry-level wages while facing high housing and living costs. Over half of Gen Z (57%) live paycheck to paycheck, and of those who do, 58% said they would need to earn an extra $2,000 a month to break the cycle.
"Gen Z is earning entry-level wages that have not kept pace with the cost of housing and the cost of living, so there's a real gap between what they earn and what they need to live, let alone what they need to save for the future," Dunaway-Seale said.
"For many, the future already feels out of reach, so they spend on what makes them happy now. That may lead to even more financial struggles, but Gen Zers are more likely to blame low wages and the economy than their own poor spending habits."
The Real Cost of Overspending
Although overspending may be more normalized for Gen Z, that doesn't mean it comes without consequences.
Among Gen Z respondents:
72% had to put off other life goals because of their spending
77% carry non-mortgage debt
57% live paycheck to paycheck despite efforts to improve
"Gen Z is racking up debt at a much higher rate than older generations, with many already owing five figures before they've even had time to build a career: 43% owe $10,000 or more," Dunaway-Seale said. "Only 59% of boomers have debt, with 20% owing $10,000 or more."
How Gen Z Can Stop Overspending and Save More Money
There are spending temptations every time you scroll on your phone or shop for groceries, so it takes intention and planning to avoid overspending. Dunaway-Seale recommended several strategies:
Establish a budget: "Many Gen Zers don’t know where their money actually goes, so the first step would be to track their spending and create a budget," Dunaway-Seale said.
Create barriers to overspending: "Unsubscribe from marketing emails, delete shopping apps or unfollow product influencers on social media," Dunaway-Seale said. "These changes are small, but can make a real difference."
Shift your mindset: "Chasing happiness through purchases just tends to leave them with more regret," Dunaway-Seale said. "There's likely more lasting satisfaction in financial stability and actually hitting the goals they're working toward."
While inflation, high housing costs and wage pressures have made saving more difficult for young adults, small behavioral changes can still make a meaningful difference. Tracking spending, reducing shopping triggers and focusing on long-term financial goals can help turn overspending into financial progress.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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