Gen Z Keeps Saving, Traveling Despite Inflation

Gen Zers are trying to build greater financial security, but they're also eager for exotic experiences they missed in recent years.

gen z, travel, gen z financial security, inflation, personal finance

Gen Zers watched their parents struggle during the Great Recession and don’t want to make the same mistakes. Worried about inflation, these young adults are trying to build greater financial stability by saving more and limiting certain purchases, but they’re also eager to make up for the travel they missed in recent years.   

More than 60% of Gen Zers said they feel “significantly impacted” by inflation, according to recent surveys by the Oliver Wyman Forum. Unlike other generations, they are spending less on apparel, holiday gifts, and other large ticket items and instead prioritizing covering household expenses and discretionary budgets for travel and sustainable goods. 

Focused on savings and retirement 

Gen Zers aren’t letting inflation prevent them from making smart money decisions. They are setting aside cash to ensure they can make daily expenses while also saving for retirement. About four in ten are withdrawing money from the stock market and establishing an emergency fund to help them ride out rough patches and cover rent payments. Almost half are redirecting other investments to retirement funds, making them over 60% more likely than other generations to adjust their savings behaviors to prepare for the long-run. 

But Gen Zers are not just addressing the short-term, they also are investing at higher rates than other generations were at their age. In fact, by 21, almost half of Gen Zers are investing and they are 45% more likely to invest than millennials were at the same age, and even further ahead that Gen Z and boomers. 

Still, nearly 40% of Gen Zers want to have a better grasp on how to manage their personal finances, which leaves a big opportunity for both companies and communities to provide support for these growing financial planners.

Still spending on travel 

In times of skyrocketing inflation, consumers often cut discretionary spending, including travel. That’s not the case for Generation Z. Their commitment to “seizing the moment” and experiencing the world has increased as inflation has risen, demonstrating that travel is increasingly becoming a generational preference. Over 80% are maintaining their travel spending compared to 72% of other generations. In fact, only 19% of Gen Zers are willing to postpone or cancel leisure travel due to financial constraints compared to 23% in July 2022, according to our surveys.

Gen Zers are instead opting to cut back on purchases of apparel, furniture, appliances, and more premium goods. On clothing purchases, only 64% of Gen Zers spend as much as they had in the past compared to 81% of non-Gen Zers. Similarly, about a quarter of Gen Zers are spending less on holiday gifts, but only 15% of older generations are cutting back on these purchases. 

But even travel hungry Gen Zers are eager to save when they can. For instance, when it comes to purchasing travel and entertainment, they are 50% more likely than other generations to prioritize price over personal preference to ensure they can experience the world in an affordable fashion. 

Not abandoning sustainable shopping

Despite concerns about rising inflation, Gen Zers also aren’t willing to completely abandon their sustainable purchases. While they are 61% more likely than other generations to be negatively impacted by inflation, Gen Zers are only 27% less likely to stop buying these products compared to 45% of older generations. Rather than abandoning these goods entirely, over 50% of Gen Zers are purchasing them less frequently to maintain their eco-habits. 

Inflation challenges all generations, but Gen Zers are learning to manage their money. As this generation becomes more financially independent, their values will undoubtedly influence their consumer habits, creating a new paradigm for personal finance. Shifting generational preferences toward leisure and entertainment as well as sustainability will also become key trends to pay attention to over time. Brands, employers, and financial institutions should take note and adapt to connect with this influential group around the products and experiences they value most.

For more content on Gen Z, check out our A-Gen-Z report

Alicia Wang and Jake Kochanwosky contributed to this article.