Generation Z prefers buying luxury items like vintage Chanel bags instead of saving for long-term goals like homeownership. Bloomberg writes about this.
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As a rule, when people are in an unsatisfactory economic situation, they refrain from spending. However, today's youth do the opposite: they consider their financial future doomed and therefore spend here and now.
Rising costs of living, changes in the labor market, and socio-political instability are the reasons why achieving financial goals, such as purchasing a home or saving for retirement, is becoming more difficult.
For example, 24-year-old Nia Holland spent her savings on a $2,500 vintage Chanel bag while earning some money while doing on-campus research while attending graduate school at the University of Michigan. This purchase does not seem irresponsible to her, because the traditional lifestyle of buying a house and having children is out of reach for her, so the girl sees no reason to deny herself “little luxuries,” especially if she feels better because of it.
< p>Stephen Wu, a professor of economics at Hamilton College in Clinton, has researched that when people are more dependent on external factors, such as the economic situation in the country or the world, they are less likely to save.
According to him, feelings of fatalism and unwise spending habits have become more common in recent years, especially after the coronavirus pandemic and the global financial and economic crisis of 2008, as people felt that “much of their successes and failures were beyond their control.”< /p>
Nowadays, young people are increasingly and longer staying with their parents, who help them with large purchases and basic needs. Generation Z spends its income on entertainment products – on social networks, people show how they order expensive food, travel frequently and buy designer items.
26-year-old Adrian Siega, who spent his last savings on a Burberry bag from the popular TV series “Descendants,” also told his story. The guy moved to New York from the Philippines in 2019 to go to college, find a job and buy a house. Over time, he felt his dreams of housing becoming unattainable. He now lives with his mother, who helps him financially.
“Thirty years ago, an apartment in Elmhurst cost $90 thousand, and now it’s $400 thousand for one bedroom; this is crazy,” he said.
Therefore, Adrian Siega decided to focus on his needs, which are here and now, namely: personal care products, stylish things, etc.
On the one hand, buying luxury goods may seem irrational, but on the other hand, If a person has given up the dream of living in his own home with children, then for him it can be justified, says 27-year-old blogger Maria Melchor, who is involved in financial education for generation Z. The Yale University graduate said that when older people ask how young people can afford items that they themselves never buy, she says, because they can’t afford anything else.
Maria Melchor added that she wouldn’t classify Gen Z’s passion for luxury goods as extravagance. She can call it a view of what life would be like for most people if they didn’t spend money on real estate and children. The birth rate and the number of marriages are decreasing, and the popularity of remote work opens up the opportunity not to be tied to one address.