Gen Z ‘consciously overspend’ on clothes and skincare

Gen Z is rewriting the rule book when it comes to overspending – from fashion to frappés or the glow of ‘glass skin’ to bingeing on Stranger Things, new research from Nationwide reveals.

The research highlights that younger generations are prepared to invest in feeling good, brand identity and self-care – even if it means putting off longer term saving goals.

Close to half (48%) of Gen Z admit to overspending on clothing (this is the generation who famously made Crocs fashionable), while over a third splurge on skincare (such as the TikTok ‘glass effect’ skin, retinols, collagen and serum) and streaming subscriptions (likely to include the long-awaited fourth series of Stranger Things).

Top treats includes takeaways (52%), coffee shop drinks such as matcha (43%), and restaurant dining (43%) underscores a penchant for convenience and comfort.

Jo Hemmings, Behavioural Psychologist, said “For some Gen Z, there’s a conscious, almost proud, tendency to splurge on the very latest trends, often far beyond what they can realistically afford.  This can be linked to identity and belonging.  For them brands are tribal, wearing a new label or buying the latest skincare isn’t just about the item itself – it’s about signalling taste, status, and cultural currency.

“They might also be highly influenced by TikTok, Instagram and Snapchat following and aspiring to celebrities like Molly-Mae Hague and Maya Jama. For many Gen Zs, overspending is a conscious investment in their social capital.

“In a world where they’ve grown up seeing influencers seemingly receive endless ‘hauls’, they often feel the pressure to keep up, even if it means dipping into an overdraft or putting off longer term financial goals.”

However happy they are to accept this cost, conscious overspending comes with consequences for Gen Z – one in three (33%) confess they save less, 22 per cent dip into savings, 13 per cent go into their overdrafts and 16 per cent cut back on food budgets.

Gen Z aren’t on their own when it comes to spending, Nationwide’s research points at approx. 15.4m UK adults across all generations consciously overspend once a month. It also reveals notable differences in overspending habits across age and gender. Women are more likely than men to overspend on non-essentials, with a third (33%) of women doing so once a month compared to one in four men (25%).

While women have long been associated with consumerism and shopping, the research reveals they are definitely not on their own when it comes to overspending. The data shows more men overspend on streaming than women (29% vs 23%) and the gym (16% vs 11%), and they are not far behind women when it comes to clothing (41% vs 48.%).  The research also showed that women are more likely to overspend than men on loved ones (17% vs 13%) and children (16 vs 12%).

The poll suggests younger generations prioritise and value lifestyle spending more, while older groups tend to be more conservative with non-essential expenses. Those aged 25–34 are the most frequent overspenders, with 43 per cent indulging monthly and five per cent doing so more than once a month. In contrast, those aged 55 and over are the most financially restrained, with three in ten (30%) saying they never overspend and only two per cent doing so more than once a month.

According to the research the consequences of consumer overspending are that 35% are putting less into savings, 24% are taking money out of savings, whilst 17% must reduce their food budget.

15% will pay off less of their debt and 8% will put less money away for their kids, A further 6% will delay buying a house.

Fred Powell, Head of Product at Nationwide said “The research reveals conscious overspending might well be part of life for some, but balance is key. It’s okay to treat or invest in yourself, but it’s not wise if it is at the cost of your bigger life goals. There are small changes you can make without feeling like you are making too many compromises. Try the 50-30-20 rule or use the Nationwide ‘Quick Save’ feature on our banking app to turn small wins into savings goals.”