Big spenders or penny-pinchers? Generational spending habits depend on your splurges

Swedish pop star Anni-Frid Lyngstad of ABBA captures the feeling of “working all night and day to pay the bills she has to pay, and still there never seems to be a penny left for her.” In the 1972 production of Cabaret, Liza Minnelli and Joel Grey sing of the power money has to make the world go round. Money, money, money—it’s always on our minds, but how we handle it can vary dramatically depending on the generation we belong to. From Baby Boomers who remember when a dollar actually went somewhere to Gen Z, who may have never seen a handwritten checkbook, each generation has its own quirky relationship with cash.

Different generations spend, save, and splurge in different ways. “In my dreams I have a plan. If I got me a wealthy man, I wouldn't have to work at all, I'd fool around and have a ball,” but that’s not reality. Let’s explore spending habits by generation and see where their money goes.

Each generation carries a distinct name tied to differences in attitudes, behaviors, and historical experiences that define its era. These distinctions are reflected in their spending habits.

Boomers, born between 1946 and 1964, grew up during the post-World War II era of economic expansion. This fostered a more traditional approach to spending, focused on saving and long-term investments.

Gen X, born between 1965 and 1980, were shaped by economic uncertainty and the emergence of a consumer-driven culture. As a result, they developed a balanced approach to spending and saving.

Millennials, born between 1981 and 1996, came of age during the rise of digital technology and the 2008 financial crisis. They tend to prioritize spending on experiences rather than material goods.

Meanwhile, Gen Z, born between 1997 and 2012, is the first generation to grow up with smartphones and social media. Heavily influenced by trends, they often prefer to purchase from companies that align with social and environmental values. Their “live in the moment” mindset significantly shapes their spending habits.

But how and where are they spending their money? And what are they buying?

The U.S. Bureau of Labor Statistics identifies the breakdown of spending categories of food, housing, entertainment, apparel and services and hobbies.

Food:

Baby Boomers: Tend to cook at home, appreciating traditional meals and cost-effective habits.

Generation X: Straddle convenience and tradition, frequently indulging in takeout but still cooking more than younger generations.

Millennials: Embrace foodie culture, spending on trendy items like overpriced coffee and avocado toast.

Generation Z: Blur the line between indulgence and necessity, leading in overspending on takeout and delivery services.

Housing:

Baby Boomers: More likely to own homes, focusing on stability and long-term investments.

Generation X: A mix of homeowners and renters, balancing family needs and financial goals.

Millennials: Often renters due to student loan debt and high housing costs.

Generation Z: Still entering the housing market, with many opting for rentals.

Entertainment:

Baby Boomers: Prefer traditional cable and satellite TV but are increasingly adopting streaming platforms like Netflix and Amazon Prime.

Generation X: Combine traditional and digital media, spending on streaming for convenience and variety.

Millennials: Fully embrace streaming, subscribing to multiple platforms and prioritizing affordability over cable.

Generation Z: Favor niche platforms like Twitch and YouTube, gravitating toward interactive and short-form content.

Apparel and Personal Services:

Baby Boomers: Focus on quality and durability, preferring classic styles and in-person services like high-end haircuts or wellness treatments.

Generation X: Seek versatile clothing for work and leisure, often combining online and in-person shopping.

Millennials: Opt for fast fashion and subscription services for affordability and convenience.

Generation Z: Value sustainability and social responsibility, spending on eco-friendly brands and trendy, limited-edition items.

Hobbies:

Baby Boomers: Spend on traditional hobbies like gardening, golf, and crafting, focusing on relaxation and fulfillment.

Generation X: Invest in practical hobbies like home improvement, fitness, and outdoor activities.

Millennials: Driven by social media, they spend on creative hobbies like photography, gaming, and DIY projects.

Generation Z: Favor tech-driven hobbies such as gaming, content creation, and streaming, often purchasing consoles, editing software, and subscriptions.

Despite generational differences, one thing remains clear: Every generation adapts its spending habits to its environment, with technology playing an ever-increasing role