Rs 15,000 sneakers, fancy holidays, expensive iPhones: Financial advisor shares why Gen Z is spending big on luxury items

Why are some Gen Z youngsters spending heavily on iPhones, expensive sneakers and overseas holidays while homeownership appears increasingly out of reach? Financial advisor Prem Soni believes the answer may have less to do with financial irresponsibility and more to do with changing economic realities. In a post on X, Soni argued that Gen Z is experiencing the “Lipstick Effect” on a much larger scale, choosing smaller luxuries when traditional milestones such as buying a home feel increasingly unattainable.

Why Gen Z is spending on luxury

Financial advisor Prem Soni took to X to question the spending habits he sees among young people. He pointed to 24-year-olds carrying iPhone Pro Max models, wearing Rs 15,000 sneakers and taking expensive foreign holidays. His question was straightforward: where is this spending power coming from?

Soni suggested that the answer could be linked to the economic concept known as the Lipstick Effect. Traditionally, the term describes a situation in which consumers continue buying small luxury items during difficult economic periods because larger purchases have become unaffordable. According to Soni, Gen Z may be experiencing a similar phenomenon, but on a broader generational scale.

What is the Lipstick Effect?

The Lipstick Effect refers to the tendency of consumers to spend on relatively affordable luxuries during periods of financial uncertainty rather than making major purchases. The logic is simple. When expensive goals feel impossible, people may choose smaller indulgences that provide an immediate sense of enjoyment or achievement.

Soni believes this helps explain why a young person might spend Rs 2 lakh on a holiday rather than save that money towards buying a home. He argued that older generations may see such spending as financial irresponsibility. However, Gen Z may be responding to a very different economic environment.

Why buying a home feels increasingly difficult

Soni compared the financial realities faced by younger people with those experienced by previous generations. He argued that when a person's father saved around 20% of his salary, buying a large independent house could once have appeared achievable within a few years. For today's 24-year-old, however, saving the same proportion of income may barely cover the down payment for a Rs 3 crore apartment.

The resulting home loan could then become a 25-year EMI commitment. Soni suggested that this changes how young people view traditional financial milestones. Retirement, financial independence and owning property without generational wealth can appear increasingly difficult for an average salaried fresher.

‘The game is rigged’

According to Soni, Gen Z has looked at these numbers and concluded that “the game is rigged.” When major financial goals seem far beyond reach, spending money on something attainable can provide a more immediate sense of control.
Rather than saving for decades for a house that may remain unaffordable, a young professional might decide to enjoy a foreign holiday, upgrade their smartphone or buy a pair of premium sneakers.

Soni believes this does not necessarily mean the person considers themselves wealthy. Instead, the spending could represent a way of enjoying the present when long-term financial goals feel uncertain.

Why an expensive iPhone may not signal wealth

Soni's argument becomes particularly interesting when applied to smartphones. He wrote that Gen Z is “not buying an iPhone because they are wealthy.” Instead, he suggested, some may be buying one because they cannot realistically afford a house and therefore choose to enjoy a premium product while continuing to rent.

In this interpretation, luxury consumption becomes less about demonstrating financial success and more about purchasing something tangible and enjoyable. The same thinking could apply to holidays, fashion, dining and other experiences that offer immediate gratification. Soni ended his post with a provocative question: “What if Gen Z boycotts buying real estate?”

Internet reacts

The post sparked discussion online, with several users agreeing that Gen Z is making more practical and informed financial choices rather than simply following traditional expectations. One user pointed to the role of the cash economy in real estate ownership, while another said property prices in metro cities have already moved beyond the reach of many people. A commenter also suggested that Gen Z increasingly prioritises short-term pleasure over long-term rewards, partly because patience levels have declined compared with older generations.