A Gen Z pair show off their latest shopping haul. Image credit: Vitaly Gariev via Pexels

“Luxury poverty” is the practice of frequently splurging on luxury goods and services in spite of financial insecurity. This practice can take the form of draining the last few dollars in the savings account to purchase high-end goods and telling stories about spending habits for a little bit of a status boost. This lifestyle can come naturally for some Gen Z youth. Our future remains uncertain due to little economic prospects and the exacerbating climate crisis.

Many Gen Z-ers have become disillusioned with the so-called American Dream. With the generational wealth that comes from homeownership likely off the table for many Gen Z-ers, there can be less incentive to save and plan ahead. RentCafe recently reported that 45% of U.S. Americans, aged 18-29, still live at home with family. This figure includes most of my friend group and me. For those of us with parents who have financial privileges, it is hard to fathom that at this same age, our parents had already purchased their first homes and started families.

In many cases, our generation of stragglers can be attributed to the widening gap between wage growth and the cost of living. The median U.S. housing price significantly outpaces median household income. It is estimated that an average U.S. American would need to earn at least $63,680 annually just to be able to rent a median-priced U.S. apartment. This figure is approximately $25,000 more than what the average Gen Z-er makes annually. I’m talking about apartment rentals, not a mortgage on a house with a yard. For those of us staring down ever-inflating home, food, car, and health insurance prices, along with the double-whammy of college debt, plus less and less entry-level jobs, it often feels hopeless.  

Some Gen Z-ers are coping with this stressful situation and reclaiming their financial agency by spending extravagantly on material goods and services that elevate one’s “status” rather than prioritizing long-term wealth-building. This is evident within my friend group of twenty-somethings who live at home. I often hear statements like, “You only live once,” or “Money comes and goes, but memories last forever,” as acceptable justifications for big purchases. These big purchases usually take the form of international trips, specialty gym memberships priced at $150 a month, or designer clothing items. Some people in our generation long to be jetsetters, developing a taste for the finer things in life. 

A jetsetter on vacation. Image credit: Getty Images via Unsplash

Social media use also has accustomed us to constantly seek instant gratification and the short-term dopamine rush that comes with it. Fast fashion, next-day delivery, membership perks, and all-inclusive resorts are constantly advertised, while trying to manage everyday tasks is becoming increasingly difficult. Especially with the temptation of credit cards and “buy now, pay later” programs, like Affirm, Klarna, or Afterpay, consumers are being encouraged to spend money they don’t even have and household debt is continuing to reach record highs.

The luxury poverty lifestyle is a series of temporary escapes from the unjust economic conditions faced by the U.S. workforce. The capitalist system that we operate under was founded on the private ownership of assets. This exploitative system is working as planned–enriching the few and entrapping the many. Our people cannot afford to live, let alone profit. We now must heed the outcries for systems change that yields fair wages that cover the true cost of living, as well as collectively-owned business models in which workers are able to reap the fruits of their own labor. Our younger generations’ survival depends on it.