Revenge spending, financial avoidance, and impulse buying are just a few financial behaviors of Gen Z consumers that may seem beneficial to companies in the short term but have disadvantageous consequences in the long run. In Q4 of 2022, credit card balances reached $986 billion, surpassing the pre-pandemic record of $927 billion. When digging into credit delinquencies, the Federal Reserve Bank of New York found that this was worsening with certain groups, specifically the twenties-to-forties age range. Forrester also predicted this consumer behavior outcome last year in our consumer predictions for 2023.
Young Consumers Are Worried About Their Financial Futures But Aren’t Acting On It
Forrester’s March 2023 Consumer Pulse Survey found that younger consumers are more likely to be concerned about their financial situation in the short term (57% for Gen Zers and 54% for Millennials) than older consumers (38% for Gen Xers and 30% for Baby Boomers). But are they doing anything about it? No. Consumer spending behaviors are painting an opposing picture. As the US navigates more inflationary concerns and a see-saw view on recession, companies should understand the complicated behaviors of consumers’ spending habits where:
- Expectations for salary acceptability are increasing. Consumers now expect a minimum of $75,811, a new series high, as the lowest wage in order to accept a new job. Consumers’ lifestyle expectations are rising rapidly — fueled by rising costs of goods and higher cost of living, as well as the increase of transparency of salaries.
- YOLO mentality post-pandemic is prevalent. Revenge spending has continued. The aftermath of living through a shutdown world causes consumers to live more presently. Credit Karma reported that credit card debt has increased 4.4% since May 2022, and while Gen Zers hold the least amount of debt, they also saw the highest growth in average card debt at 7.4% (versus 4.3% growth for Gen Xers, who hold the highest credit card debt).
- Social media fuels financial avoidance. Financial or money avoidance is when someone ignores their financial situation. Research has shown that the pandemic has increased consumers’ impulse-buying behavior. This is further fueled by the ease with which social media platforms such as TikTok, Instagram, or the emerging Lemon8 platform make it easier to shop online — where almost 50% of social media users reported an impulse purchase online, with two out of three regretting those purchases.
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