NEW YORK – Most people enter adulthood feeling broke and spending frugally. Not Gen Z.

Spending by the youngest group of US adults has been turbocharged by two once-in-a-generation drivers over the past year: decades-high inflation and a tight job market that has propelled strong wage growth, especially at entry levels. A boost in savings from forced inactivity at the height of the Covid-19 pandemic also helped.

Whether it is out of necessity in the face of soaring prices or because they can afford to splurge on travel and leisure, young adults today tend to be bigger spenders, credit-card data and surveys show.

“Gen Zs are not afraid to spend,” said Ms Taylor Price, 22, who has gathered over a million followers across social media platforms like TikTok and Instagram by sharing advice on spending, saving and investing. This generation is focused on making money, rather than keeping it, she said.

Gen Z includes those born in 1997 through 2012. While the youngest are still living with their parents, many are now old enough to think about big purchases like a car. Understanding their motivations can help define the direction the economy is headed.

Members of Gen Z are more likely than other generations to combine financial ambition with the desire to live comfortably, according to a survey of adults by Bank of America. Nearly half said being able to afford material items was a motivator to achieving financial success.

A separate survey conducted in December by financial-software company Intuit found that almost three in four Gen Zers would rather have a better quality of life than extra money in the bank.

Paying for ‘memories’

For Ms Kloee King, it is more about the experiences.

She works in sales at a tech company and directs a lot of her income towards her dog and trips with friends. The 23-year-old is fairly prudent with her money – contributing regularly to Roth IRA and 401(k) retirement accounts – and spends the rest on her rent in Seattle, travel and donating to her church.

“Things that are tied to memories or that are like paying for a memory – I’ll spend the money on them,” Ms King said, citing events like bachelorette parties and weddings. “That’s worth it.”

Gen Z has been the only age group that, in any month over the past 2½ years, has had a greater share of its cohort spending more than they did 12 months earlier, according to data from Visa based on transactions from its own branded credit cards. That includes the end of 2022, when Americans across every other age group were cutting back.

Gen Z approaches credit cards differently than other generations, said Mr Joshua Erabu, who provides financial advice on social media.

Typically relying on credit has been an indicator of financial stress, but many younger Americans view it as a tool to rack up points and rewards, even if they have the funds to pay right away, said Mr Erabu, who’s 21.

Some of the turbocharged spending behaviour by young adults can also be explained by wage growth – though in dollar terms, younger people tend to earn less. US workers ages 16 to 24 are the only group that has seen pay gains consistently outpace the consumer price index throughout the pandemic, according to data from the Federal Reserve Bank of Atlanta.

Then there is the element of pent-up savings.

Back in the pandemic, a record share of Americans aged 18 to 24 were living and working from their families’ homes, helping Gen Zers boost savings and chequing account balances by the most of any generation, according to data from the Bank of America Institute.

Similar barriers

Soaring prices for food, rent and other necessities also help explain their spending habits – just like any other generations in the current economy, young people pay more for just about everything. Adult Gen Zers are also facing similar barriers as their predecessors.

Debt can especially be a struggle for young black Americans, according to Bank of America Institute. At the same time, only around 40 per cent of Gen Z women have enough emergency savings to last three months, while a similar share of young Hispanic people do not have any investments, the group said.

The cohort as a whole is so motivated to be at ease financially that three in four said they are taking or considering steps to earn additional income, like getting a second job, Bank of America Institute said.

That is the reality for Mr Sammie Walker, who works 30 to 40 hours a week between his jobs at a deli and pizza shop when he is not in class.

The 22-year-old is on track to graduate in 2024 from the University of West Florida in Pensacola, though he is living at home some two-plus hours away to save up for his senior year. While he hopes to buy a house one day, that goal is a ways away.

“The American dream isn’t as attainable as it used to be,” Mr Walker said. “I just feel like the timeline is going to be a lot further out than previous generations.” BLOOMBERG