12 Dec, 2024
South Korean Gen MZ shunning marriage, cutting costs, as economy uncertainty bites, lifestyle report says
Singapore/Seoul, South Korea – South Korean young generation has given up on marriage and is becoming more frugal and cost-conscious in the face of rising debt and economic uncertainty, according to a report by global strategic insights practice Canvas8.
The report, How South Koreans save while staying aspirational, issued by Canvas8, a global strategic insights practise, finds that while many Koreans are still drawn to the allure of luxury goods and high-status living, the financial realities of today are forcing them to rethink their spending habits. With sky-high housing prices, high-interest rates, and a significant increase in the cost of living, the pressure is mounting for Gen MZ (Gen Y and Z collectively). Now, South Koreans are getting creative in their approach to saving, all while keeping their dreams of luxury and success alive.
The report was authored by Angel Martinez and features expert comment from Seongkyu ‘Gilbert’ Park, Assistant Professor of finance at Willamette University, Atkinson Graduate School of Management, and Seongjin Park, Assistant Professor at UNSW Business School. Here are some of its key findings:
The New Frugality and the YONO Life
South Koreans have long been known for their hustle culture and desire for material success. Yet the economic slowdown, exacerbated by inflation and rising interest rates, is driving many young people to scale back on their purchases and opt for more cost-conscious lifestyles. “With inflation – especially skyrocketing house prices – a large portion of young people cannot see a chance to own a house with the low income and wealth they have, which is different from what their parents experienced,” says Dr. Seongkyu ‘Gilbert’ Park, Assistant Professor of Finance and Assistant Dean of Undergraduate Programs at Willamette University.
“They’ve also given up on marriage now that it has become harder to meet the expectations brought by another party in their lives.” The shifting values are clear: the focus is moving toward “essential purchases” rather than indulgent luxury items.
As Gen MZ looks to navigate these financial pressures, they are embracing the YONO (“you only need one”) lifestyle, prioritizing what is necessary for survival while minimizing spending on luxuries. The shift is stark: dining out is down, while quick, affordable meals from convenience stores have become more popular. This is evident in a study by South Korea’s NH NongHyup Bank, which found a 9% drop in dining transactions by people in their 20s and 30s between 2023 and 2024, coupled with a 21% increase in convenience store spending.
“There is less need to earn more money because those who do not feel like they will succeed give up and try less hard. The income level of those [people] falls, and savings and consumption levels fall together,” Dr. Park explains. The trend toward frugality and conscious spending is rapidly reshaping the way South Koreans approach their finances.
Digital Banks and the Rise of Alternative Saving Methods
In response to economic pressures, South Koreans are looking to non-traditional means of saving. While domestic banks remain popular due to their high trust and government-backed interest rates, digital banks are steadily gaining ground, especially with South Korea’s Gen MZ. Dr. Seongjin Park, Assistant Professor at UNSW Business School, explains: “These newcomers offer convenient online services that compete directly with more established institutions, and they have also begun expanding into more substantial loan markets. As they offer loans at lower interest rates, they successfully gain a larger share of the market.” Toss Bank and KakaoBank, for instance, have tapped into younger consumers’ preference for digital convenience and low-interest options, drawing more customers in a country known for its strong embrace of mobile financial services.
Beyond digital banks, savings groups, known locally as gyemoim (mutual funds), are also becoming increasingly popular. These informal savings groups allow individuals to pool resources with trusted friends or family members to make larger purchases or manage finances collectively. With the social facilitation effect at play, these groups encourage a sense of accountability and shared financial goals, making saving a more communal and interactive activity.
Opportunities for Brands Amid Changing Priorities
Despite the growing trend of saving and reducing consumption, South Koreans’ aspiration for luxury and high-status goods remains unchanged. The country’s luxury market saw a notable 24% increase in spending on personal goods in 2022, with high-end fashion brands such as Moncler, Cartier, and Prada leading the charge. As Dr. Gilbert Park notes, “High-end luxury brands will have no problem – unless they want to increase their consumer base. But brands that are not at the high end could benefit from introducing less expensive lines to attract more customers.”
For brands, this shift provides an opportunity to rethink their offerings and pricing strategies. Convenience stores like GS25 have already embraced this shift by reintroducing affordable options, such as the Kim Hye-ja lunch box, which now sells for ₩4,500 ($3.50), offering discounts to further reduce costs. Meanwhile, discount store chains like Lotte Mart have scaled down their product portions, catering to customers’ need for smaller, more affordable quantities in the face of economic pressure.
South Koreans’ rising sense of financial awareness also opens opportunities for brands that can offer financial education. “One example of [this] is how younger generations in Korea have taken on significant loans to purchase assets, which may cause them to face higher risks of default when the economy enters a downturn,” Dr. Park explains. Financial institutions, particularly those with established trust, can capitalize on this by offering educational tools, loan options, and products that appeal to the growing demand for financial literacy.
The Power of Community in Saving and Spending
With rising household debt and individual financial burdens, South Koreans are turning to communal solutions for economic survival. These groups, which can range from simple lunch box swaps to more structured savings clubs, play a critical role in helping individuals stick to their saving goals. Apps like Danggeun, South Korea’s largest online flea market, have seen explosive growth, reflecting a new willingness to interact with others in pursuit of thriftiness.
“People have started seeking out thrifted products over the past few years, which could also increase the likelihood of interaction with others,” says Dr. Park. “True enough, online flea market app Danggeun… has more than 19 million monthly users.” This shift to thrift-driven social interaction highlights the growing trend of ‘gamified savings,’ where users exchange financial tips and tricks while fostering a sense of camaraderie.
Nick Morris, UK-based founder and Managing Director of Canvas8, said, “As South Korea grapples with economic headwinds, the ways in which its younger generations manage their finances are changing dramatically. With a shift from materialism to frugality, and from traditional banking to digital alternatives, the evolving financial landscape opens new opportunities for brands to adapt. By offering flexible, affordable products, and supporting consumers in their financial education, businesses can tap into the aspirations of a generation striving to balance their dreams with the realities of an unpredictable economy.”
For more information visit: www.canvas8.com
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