Inside The Gen Z Wallet by Zainab Hassan

Introduction

Have you ever found yourself adding items to your cart just because you found them cute?

Have you ever bought random TikTok viral products? If so, congratulations - you have just participated in one of Gen Z’s favourite rituals, known as emotional spending. Gen Z, born roughly between 1997 to 2012, are obsessed with the phenomenon of doom spending. Dooms spending is the impulsive urge to spend excessively on non-essential goods as a coping mechanism in response to negative emotional distress or uncertainty of the future. For Gen Z, money is more than just a means of survival; it’s a way of communication and expression. From fast fashion trends to the latest iPhone, Gen Z spending habits are unplanned, often fueled by emotions and instant gratification. Let’s dive deeper into the psychology of Gen Z spending habits to understand the reasons behind their emotional spending.

The Thought Behind the Finances

Compared to millennials, who viewed money as power and security, Gen Z links it more towards their own self-identity. Recent studies by qualified psychologists suggest that today, material possessions form part of an individual’s self-concept, influencing the purchases of items that may seem unwanted yet feel essential for self-representation. Classic economic theory assumes that consumers make rational decisions. However, Gen Z has a different mindset towards this theory - one driven by sentiments. Many behavioral economists have classified this concept as ‘predictable irrationality’. The dopamine hit of unboxing a new pair of sneakers justifies the reason to buy them despite having 10 different pairs in the closet.

Many believe that this habit is justified, as this generation has witnessed recessions, climate anxiety, wars, and a pandemic that made the future feel uncertain. Thus, spending now for a little joy and comfort seems to be sensible.

Social Media Trends

Sometimes, a product gets viral overnight and appears on everyone’s For You page. We have seen this happen with a tiny toy called Labubu taking over the internet, to Korean skincare products quietly dominating our feeds. Before long, it’s nearly impossible to ignore such trends. As social media is fast-paced, trends don’t just appear; they slowly shape what feels desirable and essential.Nowadays, the lines between influence and entertainment have been blurred. A simple recommendation from a celebrity feels less like marketing and more like friendly advice. Gen Z is more drawn to experience, reviews and other people’s reactions to products. They adopt products as lifestyles. The ideology of FOMO, which stands for fear of missing out, is

ever-present. Imagine seeing dozens of celebrities posting about a limited-edition Labubu charm or trying out the Dubai Chocolate - suddenly, evoking the feeling of missing out. With trends shifting so rapidly,the pressure to keep up ,engage and follow them has become a normal part of everyday life.

The Cashless Illusion

Carrying cash is such a hassle. Gen Z is currently living in a cashless era, where spending is just a tap away. Studies have found that people often spend more when they don’t physically see money leave their wallets. This phenomenon is known as “pain of paying”. This pain has entirely been eliminated by the one-click purchase,

“Buy Now, Pay Later”, and digital wallet schemes. Interestingly, a 2023 study by Deloitte reveals that over 45% of Gen Z’s have financial anxiety. This is quite strange as they are stressed about money most of the time, yet they are also most likely to treat themselves after a tough week. So, are they reckless? Or is it a coping mechanism?

Conclusion

In the end, Gen Z’s psychology of spending habits is not about money at all - it’s about the feeling and meaning behind their purchases. Where previous generations built their identities through wealth or careers, Gen Z is redefining the concept of identity by blending emotions with ethics and self-care with self-branding. It is true that they are most likely to fall into the trap of impulsive buying and trends but they are also forcing brands and society to rethink the true meaning of “value”. The key takeaway of this article is to actually reflect that spending is not just about what we buy, but why we buy.

References

Celestin, M. and Vanitha, N., 2021. The psychology of spending: Why we buy things we don't need.

International Journal of Advanced Trends in Engineering and Technology, 6(2), pp.55-63

Husnayetti, I.N. and Junarti, A.T.Y., Doom Spending Behaviour Among the Digital Generation: The

Role of Financial Literacy and Social Media Interaction

Lamichhane, K.J., 2025. Spending Behaviour of Gen Z Consumers in the Use of Digital Payment

Systems. Journal of Business and Social Sciences Research, 10(1), pp.49-64.

Deloitte (2023) Deloitte’s 2023 Gen Z and Millennial Survey reveals workplace progress despite new setbacks, Deloitte [Online]. Available at: https://www.deloitte.com/kz/en/about/press-room/2023-gen-z-and-millenial-survey.html (Accessed: 14 December 2025).