- While rising grocery and gas prices are stifling consumer spending, it could benefit people’s relationship with money, especially Gen Z.
Inflation is tightening its grip on American pocketbooks—and most consumers, including Gen Zers, are changing their money habits.
More than three-quarters of all Americans are cutting back on spending, up 9% since last year, according to Wells Fargo’s 2025 Money Study. The rising costs of groceries, gas, and housing are driving consumers to make tougher financial choices and delay important life plans like traveling or buying a home. However, experts say these struggles could have positive long-term effects on people’s relationship with money, especially Gen Zers—who are known for less-than-ideal financial moves like doom spending.
“It’s really actually an encouraging story because Americans are being hyper-intentional about their use of money,” said Michael Liersch, head of advice and planning at Wells Fargo. “Inflation in the economic environment is motivating that level of intentionality and being selective.”
Considering that many Americans struggle with financial literacy, tougher economic conditions can be a wake-up call that budgeting and proper money management are important. While Gen Zers in particular tend to have less functional financial knowledge, Liersch noted they are increasingly focused on saving, investing, and seeking advice year-over-year.
Sticker shock leads to a reversal on spending and travel
Inflation has been a conversation piece for years now, but many Americans remain surprised by the actual price of goods. For example, nearly two in five say they are shocked by the price of something as simple as a bottle of water, with one glug costing 200% more than expected ($1 expected versus $3 reality).
Moreover, 76% of Americans experience surprise or dismay at the cost of takeout and food delivery. Nearly two in three Americans feel the same about the price of gas. According to AAA, filling up a tank of gas for a mid-size car may cost around $42 today, down slightly from a year ago’s $46.
These feelings of financial discomfort are causing Americans to not only cut back to monitor their budgets but also relocate dollars as a form of reinvestment in their future. Some 74% of consumers, including young people, are choosing to save money and delay travel plans—which is likely to put an end to revenge travel. Moreover, 39% report delaying home renovations.
This is likely to be especially impactful on Gen Z, which has notoriously been frivolous with money. More than one in five Gen Zers report spending more than they did last year due to doom spending, the concept of obtaining short- and long-term gratification from shopping to cope with current political, environmental, and economic turmoil.
Sarah Hamlen, a financial advisor at Thrivent, said Gen Z’s sometimes erratic spending habits center around a lack of financial confidence. Only 21% of the generation are very confident in managing their finances—the lowest among any age group.
“If you want to build this confidence muscle, if you want to be at a point in the future where you’re not constantly worried about the future, we’ve got to start the preparation steps,” she said.
While budgeting is always a good first step, Hamlen says it’s important for Gen Zers to sit down and figure out if they will have enough money to make it to the end of the month before worrying about specific transactions.
Americans are seeking professional finance advice—in part to avoid feeling judged
Americans do not have a great relationship with their financial situation. Over half, 57%, judge themselves based on their money or lack thereof, and just over half of Americans feel that others are judging them. However, in reality, the Wells Fargo study finds that a majority of Americans do not care how much money others have, and they have friends of all different net worths.
These perceptions are causing more people to turn to professional advice—and not necessarily believe what they hear in a single TikTok video.
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Gen Zers in particular are more open to seeking professional help than Gen Xers or Baby Boomers, Hamlen said, thanks in part to pushes from their parents as well as fears about economic concerns like inflation impacting long-term goals like buying a house.
When it comes to financial influencers, stars are not as authoritative as one might believe. Just 2% of those surveyed by Wells Fargo say Dave Ramsey has the most positive influence on their approach to money. Only 1% believe the same for Warren Buffett or Suze Orman.
Establishing financial goals is the first step in building a better relationship with money. Liersch has three pieces of financial advice that he encourages individuals of all incomes to consider:
- Move away from the automated, “set it & forget it” mindset: Setting a few minutes a day or a week to analyze your spending can help you make sure you know where your money is going—and whether discretionary spending actually gives you joy.
- Organize your money: Know what accounts your money is in and consider whether it makes sense to condense to simplify your financial experience
- Have an accountability partner: Share financial goals with someone you trust and have an open discussion
As rising prices leave some consumers strapped for cash, becoming a more financially mindful individual—meaning you are tracking your inflows and outflows and how they make you feel— can be an effective way to ensure every hard-earned dollar is being spent right in the short- and long-term.
