Gen Z may be struggling with larger financial milestones, but that hasn’t stopped them from their daily coffee run.
According to a 2026 Deloitte survey, 55% of Gen Z said financial constraints have delayed a major life decision, like starting a family or continuing their education, because of their current financial situation.
And yet, Gen Z is finding ways to spend on simple pleasures. Ninety-two percent of Gen Zers said they treat themselves to boost their mood on bad days or celebrate good ones, a recent Bank of America study found. Affordable luxury goods (think: your $10 matcha latte with oat milk) often see increased buying during times of financial hardship, a trend commonly referred to as the “lipstick theory.”
Gen Z’s spin on this phenomenon is aptly referred to as the “little treat” economy. Their spending per transaction on both ice cream and baked goods is growing at twice the rate of other generations, and their spending at small and mid-sized coffee shops has increased by over 25% year over year.
While nobody is trying to take Gen Z’s treats away from them, there is a way to indulge responsibly. CNBC Select takes a look at why these little purchases bring so much joy, and some ways you can weave them into your budget without sacrificing too much.
Gen Z’s ‘little treat’ economy
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Why Gen Z spends on ‘little treats’
To some, splurging on daily rituals like an overpriced chocolate croissant may seem like a frivolous waste of money. But these small luxuries can bring joy in a world where Gen Z is struggling to pay the bills, afford housing and save for retirement.
A recent Federal Reserve report found that, in 2025, almost a quarter (24%) of people ages 18 to 29 — otherwise known as Generation Z — didn’t pay their bills in full in the month prior to the survey. And 47% had help paying everyday expenses from someone outside their household in the prior 12 months, like a cellphone bill, rent or utilities.
When it comes to housing, a separate Bank of America study found almost a third (29%) of Gen Zers said rent or housing costs were the biggest barrier to financial success. They’re also putting more money than recommended toward their rent, or over half of their income (51.9%), according to Experian — well above the 30% guideline.
Gen Z is actually saving for retirement earlier than previous generations, according to the Bank of America study. But they also save the least compared to how much they spend. Perhaps unsurprisingly, a separate KPMG survey found over one-fifth (22%) of Gen Z’s household income is put toward “discretionary” goods and services, the highest of any generation.
It’s clear that Gen Z is struggling financially, but the solution doesn’t have to be all or nothing. While it might take a little time, they can have their cake and eat it too — and still save for retirement.
Build a ‘joy budget’ into your finances
The goal isn’t to be saving every single penny for the rest of your life, but to instead create a system where you feel empowered to make purchases when you want.
If you haven’t already made a budget, you should consider doing so. Smaller, more frequently purchased treats can make it a lot harder to track your overall spending compared to just one or two big-ticket items.
If you’re looking for a beginner-friendly tool, Monarch can be a great place to start. You can bring together your finances, from bank accounts to credit cards, including the value of your home. The app also automatically tracks recurring subscriptions, and you can add a significant other (or roommate), making it easier to save toward a mutual goal or split costs.
Monarch Standout features
Customizable transaction categories, net-worth tracker, investment portfolio tracking, financial forecasting
Cost
$8.33/month (billed $99.99 annually); $14.99/month (billed monthly). Get 50% off your first year of Core Plan with code CNBC50
Categorizes your expenses
Yes, but users can modify
Links to accounts
Automatically syncs with bank accounts, credit cards, loans, retirement plans, investments and more at over 13,000 institutions
Availability
Offered for both iOS and Android. Web version also available
Security features
Maintaining only read-only access, Monarch utilizes AES 256-bit encryption and multi-factor authentication. It is SOC2 Type 2 certified and syncs accounts via Plaid, MX and Finicity.
ProsSeven-day free trialEasy-to-navigate dashboard with fully customizable reports and visualsConnects with more than 13,000 financial institutionsCouples or partners can budget together in collaboration mode (each with their own login at no extra cost)AI Assistant lets you ask questions about your finances Can track property value via ZillowAd-free experienceConsistent product updates with new features added regularlyConsNo free versionSubscription is more expensive than competitorsInvestment tracking is solid for most users but lacks advanced tools like retirement modeling, fee analysis or Monte Carlo simulationsRecommendations in the “advice” tab are genericNo undo feature when reallocating money across budget categories
Building a budget is the first step, but it doesn’t automatically mean you’ll have disposable income. Creating enough financial wiggle room for everyday treats likely won’t happen overnight, but instead through small contributions.
Putting your savings in a high-yield savings account (HYSA) is a great way to make sure the money you’re putting aside is earning you the best return. HYSAs can have APYs of 10X compared to traditional savings accounts. For example, a Live Oak Bank Personal Savings account offers a 4.00% APY and has no minimum balance requirements to open; you can open one with a single penny.
Live Oak Personal High Yield SavingsAnnual Percentage Yield (APY)Minimum balanceMonthly feeMaximum transactionsExcessive transactions feeOverdraft feeOffer checking account?
Only a business checking account
Offer ATM card?ProsStrong APY No minimum deposit and low minimum balance No transfer limitConsNo debit or ATM card No checking account offered No checks for deposits or withdrawals Spend selectively, not more frequently
If you’re looking to better manage your spending, try to be more selective with how you’re spending your money. Instead of spending on little treats every day, consider saving for more meaningful experiences, like travel or live events.
If traveling is at the top of your list, like the 93% of Gen Zers who planned to travel this past summer, consider a card that not only rewards you for traveling but comes with useful perks for your journeys.
The Chase Sapphire Preferred® Card (see rates and fees) earns a blanket 2X points on all travel purchases (plus 5X points on Chase TravelSM) and a statement credit to cover the Global Entry, TSA PreCheck® or NEXUS application fee. The points you earn can be transferred to 10+ Chase transfer partners, like World of Hyatt or United Airlines, which is one of the most cost-effective ways to travel.
With Points Boost, your rewards will be worth up to 1.5X on thousands of top-booked hotels and flights from select airlines through Chase TravelSM.
Good to Excellent670–850
Our expert take
The Chase Sapphire Preferred® Card packs a punch for a $95 annual fee card, offering annual travel credits, comprehensive travel protections, flexible rewards and more.
Pros & consYou can transfer rewards to all of Chase’s travel partners including World of Hyatt, Southwest Rapid Rewards and many moreLong list of travel and shopping protectionsAnnual Chase Travel hotel creditHas an annual feeRequires a high credit scoreMore detailsHighlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select’s editorial staff.
Earn 75,000 bonus points after you spend $5,000 on purchases in the first 3 months from account opening.Enjoy benefits such as 5x on travel purchased through Chase TravelSM, 3x on dining, 3x on vacation homes, 3x on gas & EV charging, 3x on top streaming services and online groceries (excluding Walmart, Target, and wholesale clubs), 2x on all other travel purchases, 1x on all other purchasesEarn up to $100 in statement credits each account anniversary year for hotel stays through Chase TravelCount on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Emergency Evacuation and Transportation and moreGet a year of complimentary Apple TV when activated by December 31, 2026 – a value of $156.Complimentary DashPass which unlocks $0 delivery fees & lower service fees for 12 months when you activate by 12/31/27. Plus, a $10 promo each month on non-restaurant orders.Receive one statement credit of up to $120 every four years as reimbursement for the application fee charged to your card for a Global Entry, TSA Precheck® or NEXUS application.Transfer points to leading airline and hotel loyalty programsMember FDICBalance transfer fee
Either $5 or 5% of the amount of each transfer, whichever is greater
If you’re more interested in concerts or sports, the Capital One Savor Cash Rewards Credit Card earns 3% cash back on several categories, including entertainment spending. This covers a wide range of options, from aquariums to record stores to sought-after categories like concerts or sporting events.
Earn $200 cash back after you spend $500 on purchases within 3 months from account opening
Good to Excellent670–850
18.74% – 28.74% variable APR
Our expert take
The Capital One Savor Cash Rewards Credit Card is one of the most rewarding options for earning cash back in categories such as entertainment and dining without paying an annual fee. Plus, you can combine its rewards with Capital One’s travel cards to convert them into transferable miles.
Pros & consOne of the most rewarding cash back cards for entertainment and streaming servicesNo annual feeEasy-to-earn welcome bonusHigh APRRequires a good to excellent credit scoreMore detailsHighlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select’s editorial staff.
Earn a one-time $200 cash bonus once you spend $500 on purchases within the first 3 months from account opening$0 annual fee and no foreign transaction feesEarn unlimited 3% cash back at grocery stores (excluding superstores like Walmart® and Target®), on dining, entertainment and popular streaming services, plus 1% on all other purchasesEarn 8% cash back on Capital One Entertainment purchasesEarn unlimited 5% cash back on hotels, vacation rentals and rental cars booked through Capital One TravelNo rotating categories or sign-ups needed to earn cash rewards; plus cash back won’t expire for the life of the account and there’s no limit to how much you can earn0% intro APR on purchases and balance transfers for 12 months; 18.74% – 28.74% variable APR after that; balance transfer fee appliesTop rated mobile appBalance transfer fee
Introductory fee of 3% of the amount of each transferred balance that posts to your account during the first 12 months that your account is open. After that, 4% of the amount of each transferred balance that posts to your account at a promotional APR that we may offer you at any other time.
We’re not saying you should eliminate your little treats altogether; life gets a lot more dull without them. Instead, being more intentional with your spending and not acting out of habit can help you save and enjoy larger experiences down the road.
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