Savings Versus Spending – How Zillennials Are Changing Personal Finance Trends

The zillennial generation represents a cross-section of older Gen Z and younger millennial consumers — and is developing clear habits. As digital natives, this generation tends to flock to online channels for shopping, entertainment and to connect via social media more than their parents and grandparents. Like Gen Z and millennial consumers, zillennials are more comfortable accessing financial services via digital channels.

Zillennials value subscription-based services, pay later plans and investing. These tendencies break with older generations’ in how they spend money, manage debt and grow wealth. Now established in the workforce, these adults are gaining earning and purchasing power. The key question remains: How will this emerging generation of digital-native consumers drive the economy in years to come? This is just one of the many questions PYMNTS Intelligence set out to answer in its recent Generation Zillennial report.

• Zillennials Are Leading Spenders on Monthly Subscription Services
• Pay Later Options Help Debt-Weary Zillennials Manage Their Cash Flows
• Young Adults Invest for High Financial Returns
• An Insider on the Zillennial Market Opportunity

Zillennials Are Leading Spenders on Monthly Subscription Services

Recurring monthly subscriptions is one area where zillennials spend more than older consumers. In fact, this generation loves subscriptions so much that, as their disposable income increases, they tend to add additional services. Three-quarters of zillennials paid for at least one recurring monthly subscription in the last month. Examples of heavy hitters in the space include Amazon Prime, Hulu, Netflix and Walmart+. Among high-income zillennials, the share paying for at least one subscription increases 12%. This indicates that zillennials value the experiences provided by subscription services and are willing to pay for them.

Convenience and personalization drive zillennials toward subscriptions.

As digital natives, zillennials are extremely comfortable with online shopping and digital services. This partially explains their higher likelihood of engaging with subscription-based models. The 2024 Deloitte Digital Media Trends study finds that young adults spend as much as 10% more on streaming than older consumers.

Several factors contribute to higher subscription spending among zillennials. For one, they tend to prioritize convenience and value the flexibility of online channels. They also like the personalized experiences and wide range of options subscription services provide. Connection to brands and loyalty also drive their interest in the space. As a result, those factors represent key considerations for merchants and service providers looking to engage with zillennials.

Pay Later Options Help Debt-Weary Zillennials Manage Their Cash Flows

Zillennials report more debt than the average consumer, with student loans the leading culprit. While 82% of zillennials carry outstanding balances in at least one type of debt, 77% of consumers overall do. Compared to all consumers, however, they are twice as likely to have student loans. According to Federal Student Aid, 25- to 34-year-olds represent the largest group of student borrowers: 14.8 million as of Q2 2024.

Another form of debt the generation holds is credit card debt. Yet, zillennials are 58% more likely to have buy now, pay later (BNPL) plans than the average consumer, indicating that they are interested in alternative payment options.

Zillennials rely on flexible payment plans to better manage their cash flows.

With such high odds of holding debt, it may not surprise that zillennials turn to credit products to help manage their cash flows. Flexible payment plans, such as BNPL and credit card installment plans, are especially popular among these young adults. In fact, 1 in 3 zillennials choose merchants based on the availability of pay later options. This exceeds the 1 in 5 consumers overall who do the same.

High-income zillennials are even more likely to rate pay later plans as highly important, implying that cash flow management — rather than an inability to pay upfront — may drive zillennial interest in pay later plans.

Young Adults Invest for High Financial Returns

Putting aside savings can be a challenge for zillennials, especially those in lower income brackets. Yet, despite debt responsibilities, many find ways to grow their money through active investing. One-third of this generation invested in assets such as stocks, mutual funds and cryptocurrencies in the month before the survey. Just one-quarter of all consumers made such investments. Zillennials also tend to ramp up their investments as their incomes increase. Nearly half (49%) of high-income zillennials say they engaged in investing in the month before the survey.

Younger adults grow wealth with alternative, sustainable and digital assets.

Younger investors are more than twice as likely as older investors to believe that traditional stocks and bonds alone cannot provide above-average returns, according to a recent Bank of America Private Bank report. In fact, 8 in 10 young investors show interest in alternative investments, including private equity, commodities and real estate, while half have cryptocurrency holdings.

Sustainability is also a priority among younger investors, with these consumers being 3.5 times more likely to make sustainable investments than older investors. It also drives zillennials’ shopping choices, according to the Generation Zillennial report, suggesting that sustainability is of special interest to these consumers.

An Insider on the Zillennial Market Opportunity

“Because zillennials are using streaming services, shopping online and investing, they’re leaving a larger digital footprint that financial institutions and merchants can use.”

Zillennials, the micro-generation situated between Generation Z and millennial consumers, are reshaping the financial landscape with their unique subscription lifestyle and investment preferences.

“Because zillennials are using streaming services, shopping online and investing, they’re leaving a larger digital footprint that financial institutions and merchants can use,” says Doug Brown, Chief Product Officer at NCR Voyix. By effectively gathering and analyzing data from zillennials’ online activities, businesses can create personalized financial services that resonate with this generation, he said.

“Personalization is critical in financial services,” Brown added. “Understanding how zillennials interact with these services — where they’re shopping or investing — and then providing personalized offers will deepen trust and relationships.” Personalization will allow banks and credit unions to build integrated financial solutions and offer tailored rewards programs that meet their specific needs, he said.

Zillennials also often carry significant debt and show a keen interest in buy now, pay later options. According to Brown, financial institutions can capitalize on this trend by developing flexible debt management solutions and offering financial education programs focused on budgeting and financial literacy. By addressing these needs while ensuring transparency and responsible lending practices, banks can build trust and ultimately enhance profitability, he said.

However, zillennials’ rise also brings challenges, particularly those concerning data security and privacy. As financial institutions’ collection and utilization of data gains importance, they must prioritize safeguarding this information to maintain consumer trust and comply with regulations, Brown said.

To successfully engage with zillennials, financial institutions must adopt innovative strategies tailored to this demographic’s preferences, according to Brown. This includes enhancing digital banking solutions, leveraging data for personalized offerings and maintaining a commitment to transparency.

“Those who effectively navigate these dynamics will position themselves favorably in the evolving market,” he said.