Bubble tea, Pop Mart toys and matcha lattes: Gen Zs and Millennials spend up to $1,000 a month on micro luxuries

Amid the backdrop of rising costs and economic uncertainty, a Gen Z is refusing to cut back on her spending. Relationship manager Chitra Das, 27, estimates she spends at least $1,000 a month on pampering herself and non-essentials, from facials and manicures, to premium matcha lattes and Sonny Angel collectibles.

Meanwhile, 38-year-old Laura Tan’s everyday purchases include her non-negotiable iced coffee, which tides the data analyst through the post-lunch slump in the office – this costs her about $7 a cup, or $150 a month. The millennial also flies to South Korea for annual aesthetics procedures, which usually range from $500 to $800 a pop, not including flights and accommodation.

They are not alone.

According to a recent Yougov survey, while more Singaporeans are planning to ramp up their savings and investments during these challenging times, younger people tend to spend more on “self-care” categories such as lavish food and drinks, beauty and personal care, and wellness.

OCBC’s Financial Wellness Index 2024 also found that those in their 20s are more likely than other age groups to spend beyond their means to keep up with peers, and make spontaneous purchases.

This was an 8 per cent increase from 2023’s findings, to 27 per cent last year. Those in their 30s were more financially prudent, but at 20 per cent, the number was still higher than older generations.

Call it what you will: “self-care”, “treat culture” or “keeping up with the Joneses”; but is channelling one’s hard-earned money into these micro luxuries to be frowned upon or embraced? And why do we continue to do so even as markets crash, inflation soars, and global conflicts escalate?

Guilt-free pleasures

During periods of financial uncertainty, large purchases often feel risky, irresponsible, or out of reach. However, micro luxuries offer a compromise – small, intentional indulgences that are emotionally meaningful yet financially manageable, explains social developmental neuroscientist Associate Professor Atiqah Azhari from the School of Humanities and Behavioural Sciences at the Singapore University of Social Sciences.

Prof Atiqah adds: “Psychologically, this allows individuals to maintain a sense of normalcy and optimism, without the burden of overspending. Moreover, these small joys can serve as an emotion regulation function, helping individuals combat feelings of scarcity, fear, or loss of control. This assertion of agency is crucial for psychological resilience, especially when larger life factors feel unstable.”

The act of treating oneself to a micro luxury activates the reward system in the brain by releasing dopamine, often referred to as the “feel-good hormone”. Thus, these purchases can be seen as a form of self-care, especially when done with intention, notes Annabelle Chow, principal clinical psychologist at Annabelle Psychology.

She says: “They often provide a much-needed break from the monotony or routine of daily life, offering temporary relief and a chance to reset. The mindset of ‘I deserve this’ can serve as a powerful form of self-validation, boosting mood and increasing self-compassion.”

Lin Hong-hui, clinical director, clinical psychologist of The Psychology Atelier, chimes in: “Everyone does it for different motivations at different times. For some, it is a way they intentionally carve out time and space to get something that will delight themselves.”

This aligns with what goes through Laura’s mind.

She shares: “I will tell myself that it’s my money; I deserve a little reward after working so hard. If I indulge in things like skincare, there’s even more satisfaction when I see the visible result of my smooth and glowing skin.”

Chitra adds: “I’ll admit that spending on micro luxuries has become somewhat of an everyday reflex for me. I buy what I like and it makes me happy – I don’t think too hard unless it’s above my price threshold, appears to be bad value, or if I know my husband is going to nag at me.”

Brand owners themselves have also seen how the emotional value of micro luxuries can uplift those who buy them.

“Our customers often mention that our offerings feel elevated yet personal. Many of our regulars initially discovered us as a small indulgence during a difficult week, and they continue returning for the consistency and calm that our brand represents,” shares Dixon Lim, chief marketing officer of Warabimochi Kamakura.

The Japanese warabimochi specialist opened in 2024 to long lines of customers who snapped up its sweets and drinks ahead of closing time. Its warabimochi drinks are priced from $6.90, while seasonal specials can cost up to $15.90. A premium 10-piece paulownia wooden box of the chewy cubes is priced at $19.90.

Founder of Drips Bakery, Jessica Tan, echoes this sentiment. “Our handmade bakes are a reflection of craftsmanship and tradition, and in today’s fast-paced world, they offer a moment of genuine indulgence,” she says.

“Regardless of how technology evolves, we believe that nothing replaces the soul and care poured into handmade bakes,” she adds.

Drips’ pretty tarts are priced above $10, and its quiche of the day is an affordable indulgence at $12.80.And in the case of Korean lifestyle brand Wiggle Wiggle, which held its first Singapore pop-up in March this year, an unexpected item – a calculator – became the top-seller. Prices of products at the pop-up ranged from $2 for stickers, $19 for the calculator, and up to $149 for a camping wagon.

Lily Park, CEO of Bmsmile Singapore, which manages the Wiggle Wiggle brand here, shares: “We realised that in a finance-driven city, it was especially heart-warming to see young professionals bringing a touch of joy into their everyday work with a colourful and quirky tool. That moment reminded us about why we do what we do. It affirmed our belief in creating happiness through even the most functional objects.”

Micro-luxuries are a boon for brands

Beyond price, quality and pretty pictures on social media, how are these micro luxury brands attracting and retaining their customers?

Co-founder of home-grown matcha tea brand Mori Matcha, Maverick Chua, says: “We put a lot of focus on transparency about our sourcing. People care about where their matcha comes from, and we’re proud that we are able to source from different regions of Japan and offer multiple cultivars.”

Its latest limited offering, Kirishima Saemidori Ceremonial Grade Matcha, is priced at $32.99 for a 40g portion.

“One of the best parts is how personally people connect with our product. Matcha becomes ingrained into their morning ritual or wind-down routine – it’s more than a drink; it’s an experience,” he adds.

On a monthly basis, Mori Matcha receives around 300 to 600 orders.For Chinese tea chain Chagee, its tea bars are also designed to be a little escape from the rush – with comfortable seating, a clean modern design, soothing music, and the calming aroma of tea brewing in the background, notes Katrina Khoe, head of PR, Chagee Asia-Pacific.

Chagee’s beverages range from $4.50 to $7.40, a slice of cake is about $7, and limited edition merchandise such as an umbrella costs $33.90.

Katrina adds: “It’s rarely about luxury for the sake of it. It’s more about choosing brands that reflect their values, and which offer something that feels intentional, well-made, and in tune with their lifestyle.”

Values such as inclusivity are also important to consumers today – Chagee recently opened its first signing store in South-east Asia at the National University of Singapore, run by hearing-impaired baristas.

Meanwhile, Wiggle Wiggle relies on collaborations with a plethora of brands that include Korean beauty brand Olive Young, Japanese casual wear retailer Uniqlo, and even iconic car brand Mini Cooper, all of which offer a perceived sense of authenticity and creative energy.

Endorsements by global celebrities also play a part, as was the case of Wiggle Wiggle. One of the biggest turning points came when globally recognised K-pop artists, without any paid partnership, began using and posting about the products in their daily lives, recalls Lily.

“Micro-luxuries are often tied to identity, lifestyle, and the desire to belong. For many young people, social media is where they discover and engage with aspirational aesthetics. These trends go beyond fashion; they represent an entire way of living,” says Annabelle.

When reward turns to reliance

If an item is bought without being mindfully experienced, then it might at most bring a temporary dopamine boost or escape from stress, and there might be a need to start chasing the next purchase, says Hong-hui.

She adds that some individuals may even experience guilt after the initial pleasure. In that case, being aware of the reasons behind their emotional journey – from desiring the item, to purchasing it, to using it, and after using it – could help us be more informed about our next purchase.

In addition, excessive indulgence, especially as a coping strategy, could also signal deeper issues.

Notes Annabelle: “In some cases, the pattern can border on behavioural addiction, where individuals feel a compulsion to spend despite negative consequences. The act of purchasing becomes tied to their emotional regulation system, leading to anxiety, restlessness, or irritability when they try to stop.”

Facing uncertainties in life or burnout require longer-term coping strategies like building resilience, gaining clarity, or problem-solving – not the brief relief that micro luxuries provide, she says.

“What begins as a form of self-care might eventually act as emotional avoidance. Practical strategies include setting spending boundaries, substituting purchases with non-monetary forms of self-care such as a walk, or tracking purchases to become more mindful of frequency and triggers,” says Prof Atiqah.

While Laura and Chitra still manage to spend within their means even without setting a strict budget, they still eyeball their finances from time to time to ensure that they stay on track – cutting back if necessary. However, as this knack may not come naturally to others, it’s essential to have some structure and discipline.

“I spend when I have cut back on something else, such as eating at home four days out of the week, and then allowing myself an iced coffee or matcha latte,” says Laura. “I dare not do the math across my spending, but as long as I am not living pay cheque to pay cheque, these once-in-a-while indulgences are okay.”

Adds Chitra: “I’d prioritise my health and fitness over micro luxuries. Previously, when saving up for my wedding and when my salary was lower, I would cut back on cafe visits and collectibles, so that I could still afford my gym membership.”

HOW TO BUDGET FOR MICRO LUXURIES

Karen Tang, a certified financial planner and senior wealth management consultant licensed by the Monetary Authority of Singapore, shares some helpful tips.

1. Use the 50/30/20 rule

For micro luxuries, this basic budgeting framework still applies. This falls under the 30 per cent category for “wants”, which includes all forms of discretionary spending. In high-cost Singapore, the 50 per cent for “needs” might increase to 60 per cent, which now shrinks “wants” to 20 per cent, with the remaining 20 per cent for savings and debt repayment.

Says Karen: “Within that ‘wants’ budget, one could allocate a small sub-portion (around 5 per cent of net income) to micro luxuries: For example, for someone taking home $3,000/month, that’s about $150 max per month. This keeps spending joyful yet contained.”

Do re-evaluate your “fun money” budget every six to 12 months to ensure that it still aligns with your income goals and values, she adds.

2. Automate important payments first

One strategy is to set up auto-transfers to savings and investments before any discretionary spending. This ensures micro luxuries don’t come at the cost of your future goals.

3. Use the “3X value test”

Assessing if a micro luxury is worth the splurge is a simple test, says Karen. “Pause and ask yourself: Will this $12 pastry give me at least three times its cost in value? If yes, it’s worth the treat. Otherwise, consider skipping or saving for something more meaningful,” she explains.

For example, the value it delivers can be joy, relaxation, and connection with friends over tea time.

4. Make treats an intentional ritual

“Instead of daily indulgences (eg $8 coffee x 20 workdays = $160/month), consider weekly micro-luxury rituals, such as a special Friday drink or monthly artisan pastry. This reduces spending, while making each treat feel more special and intentional,” says Karen.

She shares how a client used to reward herself for her stressful job with weekly $80 mani-pedis and monthly $250 spa massages – almost $600 a month – but then struggled to meet retirement savings targets. After switching to monthly mani-pedis along with home DIY, and trimming down massages to $200 per month, she managed to free up around $3,480 a year.

5. Tracking is key

Micro luxury purchases can easily become “invisible” spending. Karen recommends tracking every such purchase for a month to reveal spending patterns. Consider redirecting impulse spending into a savings account instead – you may be surprised at how it all adds up!

6. Use them to reward yourself

Karen suggests using micro luxuries as rewards for achieving financial milestones, such as paying off debt or hitting savings goals, so they reinforce good financial habits instead of undermining them.