#TikTokMadeMeBuyIt and other ‘drip’ Gen Z money habits
It’s no secret that Gen Z is the first generation to be considered true digital natives, having never known a world without hi-tech devices and the internet.
But “zoomers”, those born between 1996 and 2016, will also be the “most disruptive generation” in terms of spending power, Bank of America said in 2020, when it released its Gen Z to the world: watch out, here we come report.
As they come of age and enter the workforce, Gen Z’s income is expected to rise five-fold to reach $33 trillion by 2030, accounting for more than a quarter of global income, the BoA said.
So it comes as no surprise that Gen Z and what its members do with their money — from spending to investing — are at the forefront of what is trending on social media platforms, including popular video-sharing app TikTok.
With more than three billion views, #TikTokMadeMeBuyIt has become a global catch cry for Gen Z as they increasingly turn to social media for peer reviews to help them spend their money, according to global payment network Thunes.
“The way that every generation pays for goods and services is changing, all around the world,” Thunes says in its Gen Z: the future of spending report, which was released this week.
“But one generation in particular stands out. Generation Z … is growing up with a different set of habits and behaviours to the generations that came before.”
Here, we look at five trending Gen Z money habits.@haleypham
another #tiktokmademebuyit #unboxing #tryonhaul #sweatset♬ original sound - Haley Pham
The TikToMadeMeBuyIt hashtag, which allows users to share affordable or life-changing products with their followers, took off during the Covid-19 pandemic when social media users had more time to consume and create content, according to Thunes.
It also led to e-commerce powerhouse Amazon jumping in on the craze, creating an Amazon Finds storefront that features products that have gone viral on TikTok under the hashtag, says Vijay Valecha, chief investment officer at Century Financial in Dubai.
“From cleaning products to milk frothers and everything in between, TikTok has been credited for making all manner of products go viral,” Mr Valecha says.
“With video views quickly translating into sales, the app is fast becoming one of the most important marketing tools that brands have at their disposal. TikTok has become a powerful voice of Gen Z endorsements — an authentic window into a buying generation.”
2. Mobile wallets are ‘snatch’ (on point)
Gen Z is spurning traditional bank accounts in favour of new types of money management tools, such as mobile wallets, Thunes says in its report, which surveyed 6,500 people aged from 16 to 24 years in 13 emerging markets, including India, Pakistan, the Philippines, the US and the UK, among others.
“Mobile wallets are growing fast — in some markets, almost half of zoomers now use this type of account,” Thunes says.
“The evidence of our research is that zoomers globally are moving away from banking products … 62 per cent do not have one [bank account].”
Meanwhile, mobile wallets, which include the likes of Apple Pay, Samsung Pay and Google Pay, and other money management tools, are a natural progression for Gen Z because they have grown up with the world at their fingertips, Mr Valecha says.
“When online is the default state and information is merely a voice command away, why should Gen Z consumers settle for anything less than instant convenience, particularly when it comes to something as important as managing their money,” he adds.
“Generation Z has been practically raised with a smartphone within eyeshot at all times. They breathe mobile, juggle payment apps and consider terms like ‘online shopping’ redundant. The dependence on technology for money management is down to a combination of convenience and the fact that they are digital natives.”
3. Shopping is ‘drip’ (cool)
They may not like to admit it, but shopping is a popular activity for Gen Z and they currently spend about 19 per cent of their money on clothes and electronic goods, Thunes says in its report.
However, dining out and entertainment account for a slightly lower proportion of their spending, the report says.
“Shopping — and online shopping, in particular — is one of Gen Z’s favourite activities,” Thunes says.
Other important elements of Gen Z’s financial commitments include entertainment subscriptions such as Netflix and Spotify, and attending events.
However, the report says that an increasing proportion of Gen Z spending takes place online.
“Zoomers’ embrace of digital technologies puts them at the vanguard of this trend,” it says.
4. Physical cash is ‘cheugy’ (uncool)
Who needs cash when you have the freedom of mobile wallets and most of your spending is online?
Cash is highly unpopular with many Gen Zs in western markets, according to the Thunes report. About a quarter of respondents to the Thunes survey said they almost never use cash.
The cashless life trend is also catching on with zoomers in emerging markets, which have traditionally been thought of as cash-based economies.Read moreCan Gen Z help reshape traditional banking to suit their 'mobile-first' lives?Generation Z: eight tips to put you on the path to financial successGeneration Z now has an ETF that reflects its values
“In part, this no doubt reflects the changing shape of the global economy,” Thunes says. “As more people spend more of their money online — with zoomers leading the charge away from physical retail — the use of physical cash will naturally decline.”
However, Gen Z should be careful moving their financial lives entirely online, particularly if they are considering investing, Century Financial’s Mr Valecha says.
Personal Finance TikTok, also known as #FinTok or #StockTok, has become a popular segment among Gen Z investors, who are drawn to videos discussing how to get out of credit-card debt, explaining the difference between various investment schemes and encouraging young people to start investing for retirement, he says.
“At its worst, however, Finance TikTok perpetuates financial myths, scams and dangerously misleading information,” he adds.
“TikTok’s ability to take an average user’s video and show it to millions of people in a matter of hours or days is unmatched.
“Other times, it’s business owners promising to make you a millionaire — all you have to do is give them your money first. It is essential to not follow them blindly; rather, they should perform their own research and speak to trusted advisers before taking the investment decision.”
5. The metaverse is ‘bussin’ (really good)
Thanks to the Covid-19 pandemic, Gen Z is increasingly spending more time — and money — in the metaverse, playing games such as Minecraft, Fortnite, Roblox and Animal Crossing, according to a January trend report by youth research and insights company YPulse.
“In essence, the next generation is growing up with spending time in virtual worlds as their norm and [are] well accustomed to the behaviours that could be the building blocks of the metaverse future,” the report says.
“Gen Z is also more likely than millennials to purchase virtual/digital goods … more likely to have avatars in these digital spaces, which means they are more likely to be buying things for those avatars.”
Items at the top of Gen Z’s metaverse shopping list include clothes and accessories for their avatars, as well as buying in-game currencies and non-fungible tokens (NFTs), Mr Valecha says.
“Today, the virtual world is closer to reality and real people are spending very real money in a simulated universe,” Mr Valecha says.
“Research suggests that 87 per cent of Gen Z taps into the metaverse at least weekly through virtual gaming, metaverse concerts, NFTs and other virtual products.”
Demand for NFTs of art, music and in-game assets, such as digital plots of land, in the metaverse have soared among zoomers, Mr Valecha says.
However, investing in companies that create the NFTs or NFT marketplaces could be a better investment for Gen Z because they will command more value in the future, he says.
“Additionally, investments in metaverse-related stocks can be considered as the market opportunity in this space is significant.”Updated: April 11, 2022, 3:56 AM