New times, new rules: why Gen Z treats money differently
Gokul Padmanaban and Chloé Thill (Left to right) Montage: Paperjam
They spend freely, invest early and refuse to follow a script that was never written for them. Generation Z is not just changing how young people think about money. They are changing what money is supposed to mean.
For generations, the path to financial adulthood looked more or less the same. Study hard, land a stable job, save what you can, buy a house, and repeat until retirement finds you. It was not glamorous, but it worked. Most people followed it without asking too many questions. Gen Z is now asking the questions.
The first generation to grow up fully online is now entering adulthood, and the blueprint their parents handed them does not quite fit anymore. In Luxembourg and across Europe, the classic markers of financial success are either increasingly out of reach or increasingly beside the point. Homeownership, long-term employment, a pension you might actually live to collect. When a one-bedroom apartment in the city becomes unaffordable, and job security means something different than it did twenty years ago, it makes sense that Gen Z starts looking for other ways forward.
Despite facing difficult economic conditions, reduced purchasing power, rising housing costs and increasing everyday expenses, Generation Z will always find a way to go on vacation. At first glance, this may seem paradoxical.
The paradox of Gen Z’s spending habits
It is true that Gen Z tends to spend heavily on travel, often prioritising experiences over material possessions. Yet this trend cannot be fully understood without considering the impact of the Covid-19 pandemic on spending habits. During lockdowns, consumption patterns shifted dramatically. Spending moved away from services, such as travel and entertainment, toward goods, often non-essential ones, while some individuals also managed to save money.
After we all became bakers and fitness enthusiasts, reality set in, the moment when we realised everything we had missed. The absence of experiences, travel, social interactions, and discovery, created a sense of lost time. When life gradually returned to normal, so did the desire to reclaim those missed moments.
As a result, spending habits shifted once again. The post-pandemic economy has been marked by what is often called “experience rebound” or “revenge spending,” a surge in consumption driven by the need to make up for lost experiences. For Gen Z, this has translated into a strong emphasis on travel.
How many views is your trip worth?
We could attribute this choice to a deep connection to travel as something vital for mental health, self-discovery, cultural exploration and simply being able to see something other than the four walls of our room that we have looked at for too long during the lockdown.
But the truth is that it is equally important not only to experience the next adventure, but also for all your followers to know that you did.
So here we are, spending all our savings just to go to “the place to be.”
Travel is not only about personal fulfilment; it is also about visibility. In the age of social media, experiences are often shared, curated, and displayed. For some, the value of a trip is amplified by the recognition it receives online. Being seen in the right place, at the right time, has become part of the equation.
In some cases, this comes at a financial cost that may seem disproportionate. Yet, in a culture where experiences define identity and visibility, the trade-off can feel justified. Because nothing seems more important than having the perfect Instagram post on your feed, even if you end up with €2.50 in your bank account.
And this should be completely fine, because at the end of the day we are still young and inexperienced, yet Gen Z does show a completely different mindset when it comes to thinking about the future and investing than earlier generations.
Forward thinking: the Gen Z mindset
Gen Z’s financial mindset was not developed overnight. While they did not directly suffer from the 2008 financial crisis, they learned their lessons from the mistakes of past generations and as true digital natives, they have all the information and resources they need right in their hands. Despite being criticised for their needless spending, Gen Z are more realistic and financially cautious compared to millennials, who tend to be more idealistic and purpose-driven. Yet despite the fact that in Gen Z’s mind debt is a trap, the rising living costs around Europe and easy accessibility to short-term personal loans like “Buy Now Pay Later (BNPL)” have pushed some Gen Z to start their careers with bills to pay much earlier on than millennials.
Gen Z has also redefined what financial freedom means. Instead of climbing the corporate ladder and waiting for decades to retire comfortably at 65, many Gen Z want to get there earlier through freelancing, side hustles, and digital entrepreneurship. Approximately 38% show interest in freelancing, and more than 10% already earn through social media. Where millennials viewed entrepreneurship as a risky venture, Gen Z is taking calculated risks and finding new ways to build a business using the internet and social media. Research shows that more than 50% of Gen Z wants to start their own business in pursuit of stability, independence, and freedom. Even in countries like Luxembourg, one of the few in the world with a wage index where the minimum wage automatically adjusts to the cost of living, Gen Z enjoy benefits millennials never had yet they remain cautious, preferring to build their wealth rather than relying on the traditional security of a lifelong employer.
Investing earlier, newer and better
Another major factor that sets Gen Z apart is that they start investing early. According to the World Economic Forum, around 30% began their investment journey during undergrad or earlier, more than twice the rate of millennials at the same age. Access to investing platforms and brokerage accounts on mobile has made it easier than ever, and this trend has been further supercharged by fintech platforms like Revolut and Trade Republic, which attract younger users with mobile-first interfaces, lower fees, and zero minimum balance requirements.
Not only are Gen Z investing early, they also invest differently. They believe that stocks and bonds alone are no longer enough, and have turned to alternative categories, like digital assets. More than 40% of Gen Z investors hold cryptocurrency in their portfolio, and despite knowing the risks, volatility, scams, regulatory uncertainty that have genuinely hurt many, they prioritise the potential for above-average returns. There is also a trust factor that traditional banks cannot afford to ignore: many Gen Z view crypto platforms as more transparent and user-controlled than conventional institutions.
Beyond crypto, Gen Z tilts toward AI and tech-heavy stocks, and increasingly toward investments that reflect their values matching their portfolios to personal, environmental, and social beliefs. For this generation, growth and purpose are not mutually exclusive.
Change was inevitable
What we can take from this is that Generation Z changed their way of handling money.It is a shift in priorities, and once you see it that way, a lot of things start to make more sense.
Gen Z is not abandoning financial discipline. They are asking what it is actually for. Security, in their version, means options and flexibility, not a single employer or a thirty-year mortgage. They save early and spend when it feels worth it. They worry about the future but refuse to postpone life indefinitely for it.
For banks, employers, and policymakers, this is a signal worth looking into. The assumptions that shaped how previous generations thought about money and success are shifting, and fast.
Gen Z did not set out to disrupt anything. They just looked at the rules they were handed, noticed that most of them no longer applied and started the game with a fresh perspective. Now we have to see how it goes.
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