3 Ways ‘Underconsumption Core’ Can Positively Impact Gen Z’s Finances
Written by
Jake Safane
Edited by
Levi Leidy
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Social media sites like TikTok often influence consumers to make new purchases, but some trends can help your personal finances. For example, “underconsumption core” is a TikTok trend where creators highlight ways they’ve reused products, made products last a while and generally just avoided falling into the cycle of constantly buying new items.
This trend is similar to others like the no-buy challenge or no-spend challenge, which promote taking a month off from buying non-necessities. Yet underconsumption core goes further in the sense that it’s more about adopting a lifestyle that shuns trends like fast fashion and overall mass consumption. And these shifts appear to be more than just passing fads.
“When I initially heard about the no-buy challenge, I, too, thought that it was too much of a fad. I am pleasantly surprised that what was supposed to be done on a month-long basis has now been expanded to a longer period of time through the underconsumption core trend,” said Greg Stoller, master lecturer, strategy and innovation, Boston University’s Questrom School of Business.
“That assuages my concerns that this is another flavor-of-the-month promotion designed to get press or generate website clicks, or make for the newest TikTok content. Obviously, all of these so-called ‘trends’ are not, and will not, be created equally. However, I really do believe that this one is here to stay for at least the rest of the calendar year and hopefully longer,” he added.
If underconsumption core is here to stay, then here are three ways it can positively impact Gen Z’s finances, beyond the immediate impact of saving money.
It Frees Up Room in Your Budget
By buying less, you can free up room in your budget to tackle other important financial goals. For example, paying down student loans or other debt can seem daunting if you’re living paycheck to paycheck, but if you have more disposable income due to embracing underconsumption core, you can free up room to tackle these goals faster. From there, you might shift toward other goals like saving for a down payment on a home.
It Allows You To Earn Increased Compound Interest or Returns
The more you save, the more you can invest, which can lead to continually earning more through the power of compound interest or compound returns.
“If someone is able to save, strictly as an example, $50 a month, and is willing to put those savings into an interest-bearing account or a certificate of deposit, the money will grow repeatedly. It’s not the amount of money being saved in a single month, but the effect when done over a 12- to 18-month period,” said Stoller.
“The best example of this is with corporate bonds. Those financial instruments pay interest two times a year. If those dividends are reinvested over the life of the bond, the return on investment will be dramatically higher,” he added.
You Learn To Live With Less
Lastly, reducing your spending through underconsumption core can be valuable in the sense that you learn to live with less. That way, if you do need to reduce your budget due to circumstances like a job loss, you won’t be under as much stress because you’re already used to living off a smaller amount than if you were shopping a lot.
Also, learning to live with less can be valuable if you decide to temporarily reduce your income, like by quitting your job to start your own business. During that transition, you might not earn as much, but you can potentially set yourself up for greater long-term success.
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