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Is social pressure stopping Gen O from saving?

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Gen O, the 16-34 year old ‘Ostrich Generation’ have their heads in the savings sand. They’re spending for the enjoyment of today and not preparing for secure financial futures.

We recently carried out a survey[i] which revealed that more than one in 10 prefer to live in the moment and over half treat themselves as and when they want. This highlights that Gen O are thinking about short term gratification and are disregarding any longer term consequences.

We spoke to Professor Darren Duxbury from the Newcastle University Business School, and the Behavioural Research in Finance (BRiF) group, he revealed that “psychological factors influence our attitudes towards saving or borrowing and thus our spending behaviour.” So, we’ve investigated the social and cultural factors which are encouraging Gen O to spend more money in the present – consequently impacting their ability to save for the future.

What are they spending their money on?

Impulsive buying and paying for the odd item here and there is labelled invisible spending. This is where you purchase smaller items which you haven’t necessary budgeted or accounted for – such as treating yourself to an early morning Cappuccino, or a beer at the pub on a Friday night.

Duxbury notes that the issue here is that “people do not appreciate how quickly small expenses add up to large amounts of total expenditure.” The survey results show that by eating out and treating themselves when they want, Gen O are spending a large amount of income which will automatically eat into any potential savings pot.

How do Gen-O spend their money?


treat themselves when they want


eat out as an occasion a few times a month


go to a pub/bar a few times a month


spend more than half on having fun

Even when asked to think about what would motivate them to save money, only a third of Gen O said that saving for their retirement or pension would motivate them. The results (fig. 2) clearly demonstrate that the majority of Gen O would be more driven to spend their hard earned savings on experiences or items to live for the moment.

Which of the following do you save for?


for a holiday or to go travelling


for one off events


to buy new home electronics equipment


to buy things I want but don't need to buy

Of those who do actually save, a huge 41% of Gen O spend their savings on buying things they want but don’t actually need – a significantly higher proportion than the older generations. This again shows that they’re spending money on items which provide immediate or short term benefit and enjoyment, rather than preparing for longer term security.

"I buy things I want but don’t need"

Why is this happening?

Social media

Gen O’s social media usage and constant consumption of data may be blamed for them feeling the need to spend money. It’s argued that “millennials are the most technologically sophisticated and socially-conscious generation in history.” Their use of social media is embedded into daily life, with the generation posting “over 2.5 million pieces of content on Facebook, 350,000 tweets and 300 hours of Youtube video every single minute.”[ii]

Gen-O post over 2.5 million pieces of content on Facebook, 350,000 tweets and 300 hours of Youtube video every single minute

They’re sharing their day to day lives, personal photos and intimate news to hundreds of online followers – with the survey revealing that nearly 1 in 7 feel they need more control over their social media profiles. This reinforces the huge significance of their online presence.

Fear of missing out

This age of social media has bred a culture where millennials prioritise not missing out over any long term thinking – also known as ‘FOMO’. Added to the Oxford Dictionary in 2013, ‘fear of missing out’ is the term given to those who experience social anxiety when they’ve not been a part of an activity or event.

This issue has been amplified by friends and family continuously advertising their lives online. From posting about the coolest bar in town, to the trendy new restaurant which has opened up – social media draws attention to everyday socialising which the viewer probably would have otherwise been unaware of. This serves as a constant reminder about activities and events they wish to be part of, and as a result triggers the desire to spend more money just to ensure they too are involved.


Pronunciation /ˈfəʊməʊ/

noun informal

'Fear Of Missing Out'

'anxiety that an exciting or interesting event may currently be happening elsewhere, often aroused by posts seen on a social media website.'

Oxford English Dictionary

Social validation

Similarly, social validation “is a psychological phenomenon where one or more passive individuals follow or conform to the actions of others within a group.” So if an example of behaviour is set online, “their experience leads a second group of one or more people to follow suit.”[iii]

Based on the theory of social validation, the frequent use of social media leads Gen O to regularly view what their friends are buying and experiencing. Consequently they’re more likely to follow suit – ultimately leading them to spend more money than they may have otherwise parted with.

Our survey exposed that more than half of Gen O feel pressure to spend more money when socialising with friends or family. This highlights how exposure to increased temptations, the need for inclusion, and the desire to maintain a social involvement has encouraged Gen O to spend significant amounts of money to keep up with their peers.

Future uncertainty

Gen O’s approach to ‘seize the day’ may also be due to many intangible future outcomes – such as “expected life span, life-time earnings, future investment returns, future tax rates, family and health issues,” Duxbury tells us. With no certainty over these factors, it’s “a highly complex decision problem to estimate future consumption needs and the level of saving required to meet those needs, with many variables and unknowns.”

As a result, motivation to invest in savings or for retirement is made harder with uncertain returns. Therefore, Gen O are more inclined to spend their money now, where they’re able to gauge the immediate benefit – rather than investing for an unknown future with unknown returns.

What does this mean?

The desire to regularly socialise, keep up with trends, as well as temptations being shared across social media platforms has left a large proportion of Gen O with a lack of savings, with the survey revealing:

do not save as much money as they’d like to

worry about how much debt they have

often use their overdraft

don't pay their credit card debt each month

It’s clear that spending today has serious impacts on Gen O’s capability to save – even leading to significant proportions resorting to their overdrafts or experiencing debt. So, next time we log in online, or catch up with our social feeds, it’s important to bear in mind that thinking about our futures means monitoring and budgeting how much money we’re spending today.

Additional sources

[i] The research was run in consultation with Future Foundation and ICM. The findings are based on 5,000 online interviews among a nationally representative sample of UK adults aged 18 and above, carried out in February 2016 and analysed during February/ March 2016
[ii] http://www.huffingtonpost.co.uk/bev-james/marketing-to-a-millennial_b_8781346.html
[iii] http://www.forbes.com/sites/jaysondemers/2015/02/19/the-importance-of-social-validation-in-online-marketing/#530031735c82

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