As the global economic climate continues to worsen, many consumers are cutting back on non-essential purchases while maintaining spending on necessities. According to a recent survey by Credit Karma, 74% of Gen Z respondents said they would be “very likely” to reduce discretionary spending if their financial situation deteriorated further. Similar sentiments were shared by 82% of millennials, 86% of Gen X, and 87% of baby boomers.
However, the traditional line between essential and non-essential spending is blurring, with younger generations redefining what they consider indispensable. Specifically, 87% of Gen Z and 84% of millennials now classify certain traditionally non-essential goods and services as must-haves.
The report defines “essential spending” as “items or services respondents are willing to continue purchasing regardless of financial circumstances.”
Notably, 56% of Gen Z and 59% of millennials view spending on hobbies and interests as essential rather than luxuries. Nearly half of younger consumers (51% of millennials and 45% of Gen Z) would rather cut back on long-term savings than give up lifestyle experiences like dining out, travel, and gym memberships.
Additionally, streaming subscriptions (e.g., Netflix, Hulu) ranked among the top essentials across generations, with 36% of Gen Z, 37% of millennials, 37% of Gen X, and 29% of baby boomers agreeing.
For fashion and beauty, younger consumers highlighted skincare products (27% Gen Z, 26% millennials), clothing (23% Gen Z, 19% millennials), and grooming services like manicures and facials (20% for both groups) as key essentials.
When asked what shaped these spending habits, most younger respondents (60% millennials, 53% Gen Z) cited social media’s influence in elevating non-essentials to must-haves. The report suggests that many Gen Z consumers may feel more comfortable spending due to financial safety nets, such as parental support.
Courtney Alev, a consumer financial advocate at Credit Karma, noted: “Heightened emotions often drive spending—whether for distraction, anticipation, or stress r
