Those in the Gen Z age bracket have shown a desire to work hard and save earlier than older generations, but this is coming into conflict with the spending habits of America’s young adults.
Recent surveys show that the cost of living remains a leading worry across all ages, with one July poll finding that 95 percent of the country believes that the United States is in the midst of an affordability crisis. However, it is Gen Z—those born between 1997 and 2012—who appear to be holding off on saving for homes or other major milestones amid these concerns, but nevertheless engaging with the country’s consumption-driven economy.
According to a recent report from the Bank of America Institute, Gen Z boasts “the lowest savings-to-spending ratio of any generation,” meaning it typically spends far more than it has in accumulated savings each month.
However, the bank’s payment data revealed that discretionary spending has grown for this group in areas like coffee, beauty and travel, evidence that younger consumers are looking to “immediate gratification” and supporting what Bank of America calls the “little treat economy.”
Additionally, it found that such spending has risen across all income groups within Gen Z, as opposed to simply its more affluent cohorts—a sharp contrast to the “K-shaped” divide experts see emerging in other parts of the economy.
Savings Goals and Spending Habits
Gen Z has shown a desire to save despite the combined impact of affordability pressures and the effect of “treat economy” behavior on their budgets. Nearly two-thirds (66 percent) now save in some form, up from 60 percent in 2024, according to Bank of America. Of those surveyed earlier this year, 36 percent put leftover money into savings when they could, while 22 percent contribute to a 401(k) and 21 percent automatically deposit a designated amount of their paycheck into a savings account on a monthly basis.
This has coincided with the increasing use of “loud budgeting,” a personal finance trend in which individuals explicitly state their financial goals and limits—to destigmatize budgeting and spending within one’s means—and which Bank of America says 42 percent of Gen Z now practice.
In its 2026 Workplace Benefits Report, Bank of America found that Gen Z is starting to save for retirement around a decade earlier than baby boomers did and is roughly 5 percent more confident they will be able to retire comfortably as a result.
How Gen Z Is Managing Through Affordability Challenges
“Discretionary spending growth per Gen Z household has been steadily increasing since March 2025,” according to Bank of America, “suggesting affordability pressures have not led this generation to broadly pull back on nice-to-have purchases.”
However, a separate survey from May found that 42 percent of Gen Zers are living paycheck to paycheck, which rises to 73 percent for those earning under $50,000 a year.
Meanwhile, a poll from the consulting firm Simon-Kucher in June revealed that a majority (51 percent) of the group was prepared to sacrifice long-term financial goals—such as saving for a home—to improve their present-day quality of life. This compares to only 22 percent of baby boomers, though millennials were equally willing to give up on saving for the future in favor of current spending priorities.
However, 25 percent of the Gen Z respondents said they had one or more income streams to fund their spending habits, a trend highlighted by the Bank of America Institute last week, which found that “the share of gig workers among Gen Z has increased faster than any other generation, consistent with the idea that younger workers may be looking for ways to supplement their income.”