Gen Z and Millennials Lean Into Emotional Spending
New survey findings from Credit Karma suggest that young consumers’ shopping behaviors as of late are driven by emotions, not logic, with over a third of Gen Z respondents admitting their emotional spending is “out of control.”
Emotional spending, like revenge shopping, became especially prevalent during the pandemic, according to researchers at Credit Karma who credit the surfacing of anxiety and uncertainty combined with boredom among consumers. With reports of ongoing layoffs and the recession, the company says emotions are running higher than ever and leading to young consumers spending even more money to cope.
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While identification as an emotional spender, defined as “someone who spends money to cope with emotional highs and lows,” is most prominent among Gen Z (58 percent) and Millennials (52 percent), the behavior is seen by 39 percent of Americans across all generations.
As Americans turn to retail therapy to cope with their emotions, the company’s survey revealed that happiness is the leading cause of emotional spending (29 percent) followed by boredom (22 percent). Similarly, 46 percent of Americans report they are more likely to spend money as a way of treating themselves on a good day over 40 percent having a bad day. Nearly a quarter of Gen Z and Millennials said they do the majority of their emotional spending while lying in bed, followed by spending while scrolling through social media.
Emotional spending was revealed as a mood booster for more than half of respondents (54 percent) with 53 percent admitting that spending feels like a reward, 49 percent saying spending helps take their mind off of things and 42 percent who say they feel a sense of instant gratification. For more than half (54 percent) of all survey respondents, spending money on retail therapy was found to be preferential over actual therapy to deal with their emotions; however, the opposite is true for Gen Z with 54 percent reporting they are more likely to prioritize therapy.
Still, Courtney Alev, consumer financial advocate at Credit Karma, said that while consumers treat themselves as a form of self-care, emotional spending often has an adverse effect and despite gaining instant gratification, emotional spending leaves many consumers feeling regretful.
Forty-five percent of survey respondents said they had felt a sense of buyer’s remorse from emotional spending and 59 percent said that these feelings have now caused them to want to cut back on spending overall. Unsurprisingly, consumers who reported spending the most are those who feel the most buyer’s remorse, accounting for 56 percent of Gen Z and 52 percent of Millennials.
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