Gen Z and Millennials Are Losing Friends Over Spending Habits
A recent consumer survey by Credit Karma, the digital personal finance and credit service, has found a rise in younger demographics ending friendships over money. The study, conducted by Qualtrics on behalf of Intuit Credit Karma, surveyed more than 1,000 people over the age of 18 and found that more than a third of Gen Z and Millennials have a friend that pushes them to overspend.
Thus, to protect their finances and not accrue debt, Gen Z and Millennials are ending friendships.
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The younger generations are emphasizing more value on making friends within a similar income and tax bracket. Thirty-five percent of Gen Z and 29 percent of Millennials said that “it’s important that their friends earn as much as them.”
According to Millennials surveyed who noted having a spendthrift friend, 88 percent of people have taken on debt because of spending time with their friend and 15 percent said that they have taken on $500 or more in debt as a result of time spent together. Meanwhile, 80 percent of Gen Z respondents report having a friend that ends up pushing their finances and only 2 percent of the cohort said they have accumulated the same amount of debt as Millennials as a consequence.
Forty-three percent of Millennials said one of the leading causes for overspending is “dining out” while 37 percent cited “drinks and a night out.” Elaborate and milestone events such as trips and vacations were cited by another 22 percent of respondents, while 21 percent said birthday celebrations are depleting their finances.
In comparison, 37 percent of Gen Z blames dining out as a leading culprit while 36 percent said they are overspending with a friend on clothing. Notably, 20 percent of Gen Z said the self care category of massages and manicures accounts for their lavish spending.
The major causes for Gen Z’s and Millennials’ consumer overspending are that they “don’t want to feel left out,” they “want to keep up with a friend’s lifestyle” and they “want to please a friend.” Twenty-eight percent of Millennials noted that they don’t know how to say “no” to a friend.
Courtney Alev, a consumer financial advocate at Credit Karma, also notes that more than a quarter of Millennials keep their income and debts a secret from friends to avoid judgment. Alev advises young consumers to be honest and set expectations about financial limitations on dining or a night out beforehand to limit the chances of overspending.
“Spending money to keep up with friends isn’t anything new, but it could be a problem if people are starting to lose friends over misaligned spending habits,” Alev said. “Talking about your finances with your friends could help alleviate some of the stress associated with money, especially if you and your friend have different financial situations.”
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