How budgeting for treats and luxuries keeps Gen Z going

When you think of budgeting, you probably think of making sure you’ve got enough money to pay for essentials like food and bills - but that’s not the only part of it.

If you’re on top of how much money you’ve got coming in and going out, you can make sure you’re able to afford little treats, luxuries and experiences that enhance your life.

And nobody seems to realise that better than Gen Z adults.

1 in 4 young adults treat themselves weekly

According to research by Plum, nearly a quarter (23%) of 18 to 29-year-olds indulge in small treats like a nice coffee or a new item of clothing once a week.

And significantly, almost one in three (29%) say it helps to keep them going.

But at the same time, Gen Z adults aren’t willing to abandon all sense of financial responsibility, so they’re making sure they can actually afford these little luxuries.

Avocado on toast jibe is ‘unfair’

In the last 20 years, it seems like there’s been one crisis after another - the global financial crisis, turmoil over Brexit, the Covid-19 pandemic, Russia’s invasion of Ukraine and now the US-Israel war with Iran.

Young people have never known anything other than world-shaking, major global events happening around them and crises that have hit us hard economically.

And that, unsurprisingly, has had an impact.

Nearly one in four (23%) Gen Z adults said growing up at a time of economic instability has led to their age group becoming very financially literate.

Meanwhile, almost six in ten (58%) say their spending habits have changed because of the rising cost of living.

“Gen Z are often misunderstood when it comes to money,” said Rajan Lakhani of Plum.

“But the reality is they're one of the most financially aware generations. 

“The 'avocado on toast' jibe is truly unfair and incorrect.”

Young people more cautious about money

When you ask a person what wealth looks like, many will say owning a property or land, having a secure job for life, a generous pension, lucrative investments and receiving an inheritance.

But, as Mr Lakhani has pointed out, “traditional ideas of wealth” currently seem out of reach for many young people.

This, he said, has led to them focusing more on “control and flexibility”, so budgeting, saving and tracking spending have become “second nature”.

"Growing up against a backdrop of economic uncertainty has made many of them cautious, informed and far more proactive about managing their finances from an early age,” he commented.

Gen Z reselling unwanted items

As well as changing how they use the money they have available, many young adults are also trying to generate a bit of extra cash.

One of the most popular ways of doing that is reselling unwanted items.

In fact, more than one in four (28%) Gen Z adults are using reselling apps like Vinted to sell possessions they don’t want.

And on average, they’ve made £184 over the past year.

That’s a bit of cash they can either treat themselves with or put into savings that they wouldn’t have had otherwise.

“Gen Z has completely redefined what 'treating yourself' looks like,” Mr Lakhani said.

“Rather than reckless spending, we're seeing a generation that plans ahead, hunts for value and uses smart saving tactics so they can still enjoy life's little luxuries.”

Plan your budget

Creating a budget lets you see exactly how much money you have coming in each month and where it’s going.

You can then be confident that you’re able to pay for vital expenses, as well as work out where savings can be made and what you can afford to spend on treats and non-essentials.

Check out our guide to how to create a budget to get started, and give our budget planner a try - it’s free and easy to use.