Why Generation Z is breaking the mold around holiday spending by choosing to save

Gen Z shoppers are changing how they spend this holiday season. Rising inflation, tariffs and tight household budgets are making it more difficult to feel confident about money, according to recent consumer expectations reports.

As a result, many Gen Z consumers plan to spend less money on non-essential items, shopping and second-hand goods, and spread out their purchases over time.

Economic factors that affect holiday spending

Generation Z is feeling increased financial pressure on the household heading into this holiday season. Many have lower income gains and often rely on their savings to cover daily expenses. Additionally, 25% of Gen Z respondents say their financial situation has worsened compared to last year, according to PwC’s 2025 Holiday Expectations Survey.

“U.S. consumer sentiment remains cautious, with inflation continuing to dominate as the primary concern for many households,” said Cary Aldridge, head of McKinsey’s North America Consumer Growth Network. “Rising prices are driving significant shifts in consumer behavior.”

How changing attitudes may affect holiday shopping

Concerns about money, rising tariffs and overall financial health may push Gen Z shoppers to hold back on holiday spending this year, Allridge said.

“Holiday shopping, which has traditionally relied heavily on discretionary spending, is evolving in response to current economic pressures,” she said. “While discretionary items will still play a role in gift-giving, we are seeing a growing trend towards more practical gifts and essentials. Many consumers are cutting back on discretionary spending and trading up for less expensive options, indicating a more frugal and realistic approach to managing household budgets.”

Several consumer forecast surveys support the idea that Gen Z’s frugal approach to their finances will impact retail sales this holiday season:

• Spend less. Gen Z consumers expect to cut their vacation budgets by 23%. In contrast, survey respondents from Millennials, Generation X and Baby Boomers expected to maintain or even increase holiday spending.
• Focus on the basics. Over the next three months, Gen Z consumers plan to prioritize spending on essential items like groceries and gas, and cut back on spending on clothing, shoes and electronics.
• Buy used. Generation Z is more likely than other generations to buy used goods in direct reaction to tariffs, which could slow sales for retailers who handle new merchandise.

“These patterns indicate a lasting cultural shift. Gen Z’s focus on speed, experiences, and value is not only reshaping holiday shopping, but also broader consumer trends… [their] “Spending behavior reflects a delicate balance between practicality and indulgence, driven by a strong focus on value-conscious decision making,” Aldridge said.