Gen Z and Millennials named inflation the biggest problem their generations were facing in 2022. Now, in 2023, inflation has only continued to rage on, disrupting their finances and forcing them to budget differently in order to get by. When we first began asking young people their thoughts on a potential recession, which 45% of young people now say is currently happening, we also asked what about their spending would change if one did start. Now, we’ve asked what parts of their spending have changed in the last year because of inflation, as an open-end, and their top ten answers closely reflect their predicted changes:
The top thing they have changed about their spending because of inflation in the last year
- Spend less overall
- Reduce food consumption / spending
- Reduce eating out
- Reduce spending on non-essentials
- Reduce spending on entertainment / leisure activities
- Finding and/or spending money on cheaper / lower-quality / generic options
- Buy less clothes / make-up / other personal items
- Save more
- It has not changed their spending habits / behavior
- Reduce driving / gas expenditure
They’re attempting to spend less overall by reducing non-essentials
When we asked 13-39-year-olds what they’d change about their spending if a recession hit, their top answer was to only buy essentials—and their responses now show they’ve followed through. The top thing Gen Z and Millennials say they have changed about their spending is simply spending less overall, and for many that means reducing non-essential purchases, which sits just behind cutting down on food expenses and dining out (more on this later). One 39-year-old male tells YPulse they’ve stopped “buying anything I don’t have to that might be considered extra [because] my income hasn’t really increased according to inflation.” A 20-year-old male student says they’ve “Once inflation hit, I had to find better ways to get stuff than spending the most out of my pockets to buy a new or better item. I would usually ask myself if I needed it, and if I didn’t then I wouldn’t buy it.”
Along those lines, buying less clothes, makeup, and personal items is the seventh top way they’ve changed their spending for inflation. One 20-year-old female says they’re doing “Less spending on inessential things (clothing, new electronics, vacations) [because] I can’t afford it anymore. I only really have enough money for my basic needs.” Even the youngest of Gen Z we survey is seeing the difference in how to think about spending because of inflation, with a 13-year-old male telling YPulse they’re doing “Less spending on games [and instead] buying more meaningful things now.”
Food expenses and eating out are the top categories they’ve cut back on
In September, 47% of Gen Z and Millennials said if a recession began right then, they would cut back on dining out / ordering takeout. Now, inflation has driven young consumers to change their spending habits to reduce food consumption / expenses and reduce eating out. These choices come second and third only to trying to reduce their overall spending. For many, this means not only cutting back on takeout and nice meals at restaurants, but making tough choices at the grocery store, where prices have skyrocketed.
YPulse’s Food Shopping & Trends data shows Millennial parents are, as you might expect, far more likely (90%) to be the primary grocery shoppers for their households than non-parents (68%), so this category has been especially placed on them to manage. One 28-year-old Millennial mom told YPulse they’ve changed their spending on “Groceries because it’s just too expensive. We have no choice but to cut back or make do with beans, rice and other cheap foods.” Another 33-year-old Millennial mom said they they “Don’t buy as much organic as I desire.” But situations have gotten dire for other families: one 39-year-old Millennial dad tells YPulse they have “Started to skip meals just to keep groceries in the house [because] we have ran out of food…me skipping meals leaves food for my kids to eat until next time we can get groceries.”
Others say that dining out has actually at times become more cost– effective than cooking at home—which makes them angry at the companies who sell them groceries. A 36-year-old male tells YPulse “I buy much less groceries now and often price dining out to be cheaper than big meals at home [because] grocery costs have doubled and it’s unreasonable. I refuse to add to their profit margins.”
Many are relying on deals / sales and generic brands to help them through
Gen Z and Millennials’ top responses on how they’ve changed their spending include switching to generic brands, shopping more sales and deals, and even choosing lower quality items for the time being. One 23-year-old female says they’ve been “Buying cheaper options [and] buying less [because] I haven’t been able to afford all of the products I used to be able to buy, needing to cut back on what and how much I can get.” A 37-year-old male tells YPulse “I only buy things I need and try to get them at a discount or on sale [because] I spend way less now that I’m way more worried about not being able to pay the bills.” As shown with their recent grocery budgeting habits, even essentials are something these gens are trying to pinch pennies for in order to make ends meet.
In September, YPulse’s Brand Tracking data showed young consumers’ affinity for dollar store brands had risen during the time inflation was, too—highlighting how the cheapest of options became more popular in times of need. Even on social media, dollar store #dupes and recipes have gone viral, as young consumers search for the best way to stretch their money until prices (hopefully) fall back down. Now, generic and store brand items have become a new mainstay for Gen Z and Millennial consumers as the products they were used to choosing only increase in price. One 31-year-old Millennial dad told YPulse “I started to purchase off brand items [because] I just couldn’t afford my normal items.”
Many, many other young consumers echo the same sentiment on reducing their spending to cheaper options—meaning that any brand which can offer them essentials at a budget–friendly price will be their top choice, at least until inflation calms down.