How inflation's wrath is changing the way Gen Z spends money

Generation Z is cutting back.

Nearly three in four Gen Zers have curbed their spending in response to inflation’s bite, according to a new survey from Bank of America.

Young adults are cooking at home rather than dining out, spending less on clothes, and limiting grocery purchases to essentials.

In a sense, Generation Z is confronting rising prices for the first time. The generation was born between 1997 and 2012, by a standard definition, and came of age in an era of negligible inflation, with prices rising 1% to 3% in a typical year.

Inflation surged to an average of 4.7% in 2021 and 8% in 2022, rates not previously seen in Gen Z’s lifetime. Rising prices continue to vex Americans, with the consumer price index jumping 3.7% between September 2022 and September 2023.

Protect your assets: Best high-yield savings accounts of 2023

Has inflation transformed Gen Z into fiscal conservatives?

Inflation may be shaping Gen Z into fiscal conservatives. According to Bank of America’s Better Money Habits survey, released Friday, Gen Z spending declined by more than 2% between May 2022 and May 2023. Spending rose among the oldest Americans, including baby boomers and the Silent Generation, in the same span.

The survey, conducted in August, covered a representative sample of more than 2,000 American adults.

“This younger generation has proven resilient and resourceful in managing their money during a challenging environment, and adapting their lifestyles as needed,” said Holly O’Neill, president of retail banking at Bank of America.

They can't buy into that American DreamHow younger workers are redefining success.

Nearly two-fifths of Gen Zers said they had experienced a recent financial setback, in the form of diminished savings or new debt. One in four said they had resorted to borrowing money from family or friends.

More than half of Generation Z said they lack a basic emergency fund, sufficient to cover three months of expenses.

Roughly one-third of Gen Zers said they had taken on a “side hustle," as a pathway to financial stability.

How are you coping with costs? What's their impact on your hopes and dreams? Share your story with USA TODAY: