Digital Payments and Personal Finance: Understanding Gen Z’s Spending Behaviour

Abstract

This study investigates the impact of UPI-based digital payments on financial behaviour and whether real-time spending nudges can enhance financial discipline among Gen Z college students in India. It was conducted in three stages: a pre-survey, a 2-week A/B experiment and then a post-intervention survey. The findings of the pre-survey identify that 79.4% students are regular users of UPI, 87.3% budget-followers still overspend and 54.3% have admitted about increase in spending due to UPI use. The A/B experiment involved a control group (group A) who received just a basic expense tracker and a treatment group (group B) that receive alerts when you reach 50% and 80% of your weekly spend budget threshold Both groups curtailed spending in Week 2, but Group B specifically reduced discretionary spending by 51% - almost two times the cut made by Group A at 41.8% - while keeping their essential expenditure intact. Of GroupAmong Group B participants who received a budget alert, 82.1% cut spending the next week. The post-survey displayed a clear relation between budget adherence and subsequent savings advantage for Group B. Tracking increased financial awareness in both groups equally, but the nudges actualized that awareness into action. The findings support the integration of opt-in budget alerts baked into UPI platforms, as a low-cost and high-impact intervention designed to improve Gen Z's financial discipline.