Time to take a second look
There’s a good chance you may have found yourself uttering the phrase, “I really shouldn’t be spending this much” — mid trip to the mall with an oat milk latte in hand. But despite headlines warning of an economic slowdown and the not-so-soft whisper of a recession, a growing number of young adults are choosing indulgences over budgets.
According to a 2023 Morning Consult report, Gen Zers and millennials are spending more than $400 a month on non-essential purchases like travel, recreation and dining out. That’s significantly higher than the $250 Gen Xers spend and double the nearly $200 boomer benchmark.
The economy as a whole is still banking on consumer resilience. The National Retail Federation projects 2025 retail sales will hit $5.42 trillion, perhaps driven in part by younger generations keeping their wallets open, even as their savings shrink.
While the impact of economic uncertainty may not yet be visible in your day-to-day life, it’s likely on the horizon. And when it arrives, you’ll want more than just a closet full of trending accessories. A well-padded emergency fund will offer the kind of value fast fashion can’t.
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Learn moreFinding the balance
Prioritizing wants over needs during economic uncertainty can leave young consumers vulnerable to debt, with little to fall back on when the unexpected hits. “Now that you’re a young adult, you’ve got bills to pay. You have to save for retirement. You have to save for an emergency fund. Maybe you’ve got young children yourselves,” Singletary said on the podcast.
You can start by building a budget. Not just a mental tally of your spending — but a written, trackable plan that accounts for fixed expenses, savings goals and the real cost of lifestyle choices. Even small changes can have a lasting impact. For example, swapping food delivery for planned grocery runs can save hundreds each month while teaching discipline in spending.
Next, it would be a good idea to create an emergency fund. You could aim to save up three to six months’ worth of your essential expenses and make each contribution non-negotiable, like rent. This cushion can help cover job loss, medical bills or even the inevitable life hiccup — all without reaching for a credit card.
Aside from an emergency fund, you could also start contributing to a retirement account — whether it’s a Roth IRA or 401(k). Putting even a small amount away now allows compound interest to do the heavy lifting long term.
And if you’re still craving that big splurge, you can budget for it by setting aside a small amount regularly and make it a conscious reward — not a spontaneous swipe.
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