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- Banking Milz #7: Understanding the MilZ Money Mindset and How to Adapt to It
Banking Milz #7: Understanding the MilZ Money Mindset and How to Adapt to It
Part One of a Two-Part Series
Fonta Gilliam
April 28, 2025
This week kicks off something new: a two-part series exploring how sky-high prices and attractive savings rates are changing Gen Z’s relationship with money.
From the rise of budgeting apps and viral challenges, to the trend of “doom spending” and the pursuit of a “soft life,” younger consumers are coping in creative (and sometimes concerning) ways.
Today you’ll learn how financial anxiety is driving demands for transparency, personalization, and wellness tools – essentially a call for banks to step up.
And next week I’ll highlight innovative responses, including case studies to illustrate how forward-thinking brands are adapting (without the sales pitch).
Jump to the Deep Dive or take a moment first to catch up on the latest industry news. On your way out, please let me know what you thought in my weekly 3 second poll. And if you are enjoying this newsletter, consider recommending it to a friend or colleague by sharing this link: https://news.wellthiapp.com/subscribe.
In this issue
ICYMI
Gen Z and Millennials Give Local Banks a Second Glance – 52% of young adults say they might try community banks, apparently proving that even digital natives enjoy a little hometown banking nostalgia (and maybe a teller who asks about their dog).
Gen Z Holiday Shopping: BNPL > Credit Cards – A new survey shows more Gen Z used “Buy Now, Pay Later” than credit cards during the holidays, because nothing says festive cheer like “I’ll pay for this in four easy installments, grandma!”
Doomspending Is a Thing – Nearly 47% of Gen Z have no emergency savings — looks like their rainy-day plan is to spend money to forget the rain, then borrow an umbrella when the storm hits.
Gen Z Embraces the Credit Card (Gasp!) – Gen Z’s average credit card balance is already ~26% higher than what Millennials had at the same age . So much for “Gen Z hates credit cards” – apparently those travel points and sneaker purchases are just too tempting.
Green Finance or Bust – 45% of young banking customers want sustainable credit/debit cards , meaning your card better be as green as the matcha lattes they’re buying – or they just might swipe left on your bank.
DEEP DIVE
Understanding the MilZ Money Mindset and How to Adapt to It
By Fonta Gilliam (Part One in a Two-Part Series)
Gen Z and Millennials are coming of age in a time when eggs cost more, rent keeps climbing, but savings accounts suddenly pay around 5% interest. This strange mix of economic anxiety and opportunity is forging a new money mindset for many of us–one that bankers and financial advisors cannot afford to ignore.
The bottom line: The economic shocks of recent years are catalyzing a new mindset in milZ – one that mixes pragmatism with a streak of YOLO (“you only live once”). Financial institutions that embrace this new reality – urgently and boldly – stand to earn the trust and business of this influential cohort. Those that don’t may wake up to find their future customer base has moved on without them.
Inflation’s Reality Check: Young Consumers Feel the Squeeze
If you want to understand MilZ’s money mindset, start with the economic context. Many of us came of age during a global pandemic and then got smacked with the highest inflation in four decades. The high cost of living forced difficult trade-offs, and for many, it also fueled anxiety about the future.
One striking survey found that two-thirds of young people don’t believe they’ll ever have enough money to retire.
It’s a pessimism unheard of in our parents’ or grandparents’ youth. Having watched soaring rents, student debt, and now inflation erode our financial security, many MilZers feel traditional milestones (homeownership, student debt forgiveness, and comfortable retirement) are slipping away.
It’s no wonder more than half (52%) of Gen Z says the cost of living and insufficient income are major barriers to their financial success.
These pressures have psychological fallout: in one Bankrate survey, 47% of Gen Z respondents said money issues negatively impact their mental health. Financial worry is a constant companion for our generation.
How are we responding? In surprising and sometimes contradictory ways. On one hand, there’s a cohort doubling down on thrift and savings, determined not to fall victim to economic uncertainty.
On the other hand, many of us are throwing up our hands and spending in the moment, adopting a “tomorrow may never come” outlook.
This divergence has given rise to new buzzwords in Gen Z’s financial vocabulary – terms like “doom spending,” “soft saving,” and “loud budgeting.” What do these mean? They capture the emotional whiplash of trying to build a life amid chaos.
Takeaway: Many Gen Z consumers feel financially insecure. Some react by overspending now, others by aggressively saving – but all are looking for guidance and relief.
The High-Yield Savings Revival: 5% APY Sparks a Savings Culture
Good news for depository financial institutions! Amid the gloom of inflation and a possible recession, one bright spot has grabbed Gen Z’s attention: high-yield savings accounts.
After years of earning pennies in traditional savings, MilZ is now waking up to find some banks (especially online) offering 5% or more on deposits. That’s more than 10 times the national average rate for savings.
MilZ has responded with enthusiasm. In fact, recent data from YouGov shows Gen Z is 30% more likely to open a new savings account than older generations
This aligns with findings that nearly half of Gen Z (47%) save over 20% of their income each month – a significantly higher saving rate than any other age group.
They are often dubbed a “financial powerhouse in the making” for this very reason. Growing up with budgeting apps and FinTok (financial TikTok) tips at their fingertips, many Gen Zers have surprisingly prudent instincts. When they see 5% APY offers, they pounce.
Over 22% of Americans moved money into higher-yield accounts in just one month (December 2024).
But it’s not just about parking cash in any old account. Young consumers are choosing institutions that meet their needs. In practice, this often means digital-first banks or fintech apps. A stunning 99% of Gen Z uses mobile banking regularly – managing money through a smartphone isn’t a luxury, it’s a necessity.
So, it baffles me whenever I hear that banks are decreasing social media and digital innovation spending in favor of retail branch spending. Given that 73% of global banking interactions now occur through digital channels, this shift seems misaligned with current consumer behaviors.
Gen Z Money Mindset: By the Numbers
47% 35% | 66% 85% |
Moreover, a 2020 Capgemini report highlighted that banks in North America and Europe allocate up to 75% of their IT budgets to maintaining outdated systems, leaving little room for innovation. This underinvestment in digital transformation can lead to operational inefficiencies and diminished customer trust.
For traditional institutions, the HYSA boom is a wake-up call. When 7 in 10 Americans say saving is a priority but only 3 in 10 use high-yield accounts, there’s a huge opportunity to educate and attract customers – especially younger ones who are more open to switching. Banks that emphasize competitive savings rates, make onboarding seamless, and perhaps gamify the savings experience are finding success. The bottom line: In a 5% APY world, neglect your savings products at your peril. This generation is awake to the math, and will move their money accordingly.
Soft Saving vs. Doom Spending: A Tale of Two Reactions
Not all of us are rushing to hoard cash. Paradoxically, the same inflationary pressures that spur some MilZers to save more are pushing others to spend with abandon. Enter the dueling trends of “soft saving” and “doom spending.”
Soft saving (also dubbed the “soft life” approach to money) is an emerging mindset where quality of life now is the priority. Instead of the old-school mantra of “scrimp and save for later,” many of my generation are saying: life is too short for deferred gratification.
In practical terms, soft saving often means no saving. Three in four MilZ would rather enjoy a better lifestyle today than have extra money in the bank for tomorrow. They’ll cover the basics (bills, minimum debt payments), but any extra cash is seen as a means to live comfortably, travel, invest in hobbies, or simply not stress.
Let’s be honest. This could really be applied to many Americans. Recent studies indicate that approximately 37% of Americans cannot afford an unexpected expense over $400, and about 21% have no emergency savings at all.
On the flip side is doom spending – perhaps the most dramatic expression of financial fatalism.
Doom spending is retail therapy on steroids: shopping for instant gratification and comfort as a way to cope with economic stress. Facing a barrage of bad news (pandemics, inflation, wars), a subset of young people respond by saying “screw it, I’m buying that pricey thing – the world is burning anyway.”
35% of Gen Z have admitted to doom spending in surveys, far higher than the rate for Boomers.
Doom spending often means splurging on experiences or items that feel meaningful in the moment, like luxury fashion, high-end gadgets, or indulgent treats and trips. One report found 41% of Gen Z bought a luxury watch in the past year (averaging over $10,000), presumably reasoning that a Rolex today is better than a down payment that might never happen. As the saying goes, when the Titanic is sinking, might as well enjoy the music.
Financially, of course, this is dangerous territory. Racking up credit card debt has consequences, and we see it in the data: Gen Z’s average credit card balance at age 22-24 is already 26% higher (inflation-adjusted) than what Millennials carried at that age.
They are also more likely to fall behind on payments. “Gen Z really prioritizes fun over finances when it comes to things like eating out, shopping, and travel,” says Courtney Alev of Credit Karma, noting this helps explain why their card debt is growing fastest. In one survey, nearly 27% of Gen Z said they actually have more debt than savings.
It’s not all doom and gloom (pun intended). Counter-movements within MilZ are trying to combat these unhealthy habits. One such trend is “loud budgeting,” essentially making a public flex out of frugality.
Viral TikTok videos show young creators proudly canceling pricey plans or vocally sticking to a budget – reframing saving money as something to brag about rather than hide. “Quiet luxury is out, loud budgeting is in,” proclaimed one TikTok that garnered 1.5 million views.
The idea is that by openly saying “I can’t spend, I’m saving for X,” young people support each other in financial discipline and remove the stigma of being on a budget. It’s budgeting as a social media trend – and it seems to be catching on.
When houses cost a million dollars and some boomer will outbid us anyway, we’re giving up on homeownership and instead using that money to give our dogs the best life possible.
Financial experts note that loud budgeting is a “smart invention” by Gen Z as an antidote to the shortsighted nature of soft saving and doom spending. In other words, for every Gen Z shopaholic, there’s another Gen Z on TikTok with envelopes and Excel sheets preaching “every penny has a purpose.”
For banks, understanding these nuances is key. The rise of doom spending and soft saving signals a deep emotional undercurrent: financial anxiety, disillusionment with traditional wealth-building, and a craving for immediate fulfillment.
Simply wagging a finger at us for not saving enough won’t work – we’ve heard it and it doesn’t resonate in this climate.
Instead, financial institutions should ask: How can we tap into MilZ’s motivations to help them help themselves? How can we empathize? How can we make it easier and more rewarding?
In Part Two next week, I’ll answer these questions by exploring exactly what MilZ is demanding from their financial partners in this anxious era – and how some organizations are innovating to answer that call.
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