Gen Z Says No to Work, Yes to Debt

People walk through a shopping area in Manhattan in New York City on June 7, 2021. Angela Weiss/Getty Images

Commentary

Generation Zers are leaving the workplace in high numbers. At the very same time, they’re falling deeper into debt.

You’re undoubtedly familiar with “buy now, pay later” (BNPL), a type of short-term financing that allows a consumer to purchase something immediately and pay for it later. The model has soared in popularity in recent years, and 39 percent of Americans have tried BNPL at least once.

In 2020, according to the California Department of Financial Protection (DFPI), 91 percent of consumer loans issued by the state were BNPL loans.

The financial flexibility offered is indeed appealing—perhaps a little too appealing. In the United States, members of Gen Z, also known as the TikTok generation, are the biggest users of BNPL services. This should come as little surprise. BNPL came of age when online shopping was just gaining steam; no generation is as active online as Gen Z. These digital natives spend an average of 2 hours and 43 minutes online every single day; that works out to more than three full days per month. That’s a lot of browsing and swiping.

Of all the social media platforms, TikTok is the most popular among Gen Zers (hence the TikTok generation moniker). For Gen Z, Instagram is losing its appeal. TikTok, on the other hand, is growing in popularity. In the United States alone, it boasts 80 million monthly users, 60 percent of whom are female.

Worryingly, though, many influencers on TikTok are pushing the BNPL narrative. Because of this, millions of Gen Zers are purchasing things they don’t need; worse still, they’re racking up enormous amounts of debt in the process.

In a recent article for SFGate, writer Joshua Bote discussed the myriad ways in which “Gen Z, in particular, has fallen in love with short-term loans.” This is problematic on many levels, he argued, especially when one couples “nearly instantaneous loans with an influencer-addled social media culture that prioritizes exorbitant spending and normalizes debt.”

Indeed. Right now, you’re just a few clicks away from being able to purchase an item or service you probably don’t need.

The Amazon website is seen in Dandenong, Australia, on Dec. 5, 2017. Quinn Rooney/Getty Images

Affirm, one of the leaders in the BNPL market, recently signed a lucrative contract with Amazon. The reason Amazon signed the deal is relatively simple: BNPL encourages people to spend more. In the United States, 60 percent of Gen Zers have an Amazon Prime account. In 2019, Amazon overtook Apple as Gen Z’s favorite brand. Perhaps this helps explain why this particular generation is spending more than other generations—a lot more.

According to the aforementioned Bote, Gen Zers are currently “spending 925% more” today than at the same point in 2020.

Numerous articles have been written about Gen Z’s good money habits; they scrupulously save, we’re told. In truth, though, the average Gen Zer is drowning in debt. In fact, they have the highest total average debt by generation.

While members of Gen Z continue “revenge spending” (a phenomenon that sees consumers rush to make up for all the purchases they couldn’t make during the COVID-19 lockdown), they would do well to ask themselves: Who, exactly, am I getting revenge on? Spoiler alert: The answer is no one but yourself.

The rise of BNPL and “revenge spending” comes simultaneously as Gen Z is busy disrupting the workplace. Fifty-six percent of Gen Zers would rather be unemployed than let a job interfere with their personal lives. This generation has dreams, big dreams—just not dreams of working. This is the generation that inspired last year’s quitting spree.

How is one expected to actually pay for goods and services without a source of income? This might sound like an obvious question to ask. Nevertheless, sometimes the obvious needs to be asked.

Although millennials, my own generation, aren’t exactly a shining example, Gen Zers appear to be even less resilient. A frightening thought, I know. After all, what’s more fragile than a snowflake? A lack of resilience is closely associated with poorer mental health; a less resilient person is more likely to struggle with depression and anxiety. Not surprisingly, members of Gen Z are struggling with both.

This brings us back to the BNPL phenomenon sweeping the country. By 2025, the BNPL market could be worth as much as $760 billion. As an increasing number of Gen Zers continue to avail of BNPL services, are we more likely to see an increase or decrease in mental health issues?

An increase, one imagines. People in serious debt are more likely to suffer from stress and increase suicidal thoughts. Suicide is now the second-leading cause of death for Gen Z.

To conclude, being in debt is the stuff of nightmares; it leads to sleepless nights and endless anxiety. So before you avail of an “instant loan,” ask yourself these three questions: Is it worth it? Do I need it? Do I have the means to pay back what is owed? If the answer to any of these questions is no, then don’t, under any circumstances, avail of the loan.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.