Gen Z women are spending big bucks on social media purchases — while racking up all kinds of debt. But here’s why they’re at bigger risk of being influenced than generations before

Keeping up with the Joneses — on TikTok

With ongoing inflation, consumers are paying more for almost everything, from rent and groceries to apparel and recreation.

Between 2021 and 2023, Gen Z increased their non-mortgage debt by 99.3%, according to a LendingTree study, including personal loans (rising 207.4%) and credit card balances (rising 174%). The study defines Gen Z as those born after 1996, from ages 18 to 26 in 2023.

At the same time, on social media they’re constantly bombarded by curated images of influencers living their “best life,” whether it’s enjoying a Mediterranean vacation or a Taylor Swift concert. This can trigger FOMO, a fear of missing out, which in turn can lead to increased spending in a modern-day version of keeping up with the Joneses.

So, rather than tightening their belt, many Gen Z are spending their money on products and experiences they see on TikTok, while their paychecks aren’t stretching as far as they used to.

Indeed, an Experian survey found that 63% of Gen Z prefer to spend their money on “life experiences” such as trips or concerts, rather than saving for retirement. Nearly the same amount (61%) are “somewhat or very financially dependent” on their parents.

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The problem with girl math

This isn’t helped by trends like “#girlmath,” a TikTok trend that rationalizes bad spending habits. As an example, if you return a sweater for $50, then buy another sweater for $70, then — according to girl math — you’ve only spent $20. That’s because girl math conveniently leaves out the $50 you previously spent.

This behavior is known as “mental accounting,” where people think of value “in relative rather than absolute terms,” according to Behavioral Economics. They also “fail to fully consider opportunity costs (trade offs).” Mental accounting explains why people are willing to spend more money when they use a credit card than when paying with cash.

Gen Z continues to accumulate debt, with credit card debt growing faster than any other generation — at a time when costs are increasing and purchasing power is decreasing.

For women, paying off this debt could be even more difficult: On average, women were paid 78 cents for every dollar paid to a man in 2022, according to the National Partnership for Women & Families. Based on its calculations from U.S. Census Bureau stats, that added up to a difference of $11,450 over the course of a year.

Perhaps a better “girl math” equation could help Gen Z understand the benefits of compound interest, paying yourself first and spending less than you make — so they can live their best life by putting money aside for future goals, emergency funds and an early retirement.