The Decline of Indonesia’s Middle Class

Indonesia’s economy has long relied on its growing middle class as a key driver of consumption. But recent data reveals a troubling shift. According to the World Bank, nearly 10 million Indonesians fell out of the middle class between 2019 and 2024, reducing the group’s strength as an engine of growth. At the same time, the “aspiring middle class” has grown to more than 137 million, many of whom live with limited financial security.

This erosion of stability is reshaping daily life. Millennials and Gen Z, who should be entering their prime earning and family-building years, face stagnant wages, rising living costs, and fewer protections in a post-industrial economy. These pressures are central to understanding Indonesian Millennials and Gen Z finance strategies. For many, financial planning is no longer about upward mobility but survival.

The challenges are evident in lifestyle decisions. Millennials delay marriage, homeownership, and having children, while Gen Z embraces side hustles, freelancing, and project-based work. These choices aren’t merely lifestyle preferences—they are adaptive responses to an economy that no longer guarantees security.

Rethinking Financial Wellbeing

For young Indonesians, financial wellbeing today goes beyond income. It is about empowerment, resilience, and clarity. The Indonesia Millennial and Gen Z Report 2026 shows that 64% of Gen Z respondents experience financial stress, driven by stagnant wages, inflation, and digital pressures.

Emergency savings have emerged as the top financial priority. Nearly 63% of respondents rank emergency funds as their primary saving goal, surpassing long-term investments or property. Yet, access varies—70% of youth in big cities save for emergencies, compared with only 56% in secondary cities. This gap reflects how unequal opportunities impact financial readiness.

Soft saving, a new trend, is gaining traction. Rather than following rigid saving models, Millennials and Gen Z balance emergency funds with self-care spending. Therapy, concerts, skincare, and travel are not considered luxuries but tools for maintaining emotional resilience. This approach aligns financial planning with mental health—another marker of how Indonesian Millennials and Gen Z finance choices are deeply values-driven.

The Role of Financial Influencers and Digital Tools

Digital media has transformed how Indonesians learn about money. From Instagram reels to TikTok explainers, financial influencers play a significant role in shaping decisions. Platforms like YouTube are also home to accessible personal finance lessons, teaching everything from budgeting basics to cryptocurrency investing.

The rise of financial influencers highlights the demand for relatable and practical advice. Unlike traditional financial institutions, these creators explain complex ideas in everyday language. Their popularity reflects a gap in trust—many young Indonesians prefer guidance from peers over banks.

Meanwhile, digital finance tools have become central to money management. Budgeting apps, e-wallets, and digital credit platforms make saving and spending more transparent. However, they also introduce risks. Without regulation, digital credit can lead to debt traps, especially among Gen Z who are more willing to experiment with new financial products.

As a result, policymakers are being called to regulate digital credit systems while also supporting financial literacy. The report makes clear that Indonesian Millennials and Gen Z finance decisions are not only personal but deeply shaped by the digital ecosystems around them.

Mindful Consumption and Ethical Finance

Another defining feature of financial behavior is mindful consumption. For Millennials and Gen Z, every purchase is an expression of values. Whether it’s supporting local brands, choosing thrift fashion, or investing in sustainable products, money is no longer purely transactional. It is reputational and moral.

Circular fashion, thrift culture, and minimalist living are gaining popularity. These choices reflect a shift away from accumulation toward alignment between values and spending. Cempaka Asriani, founder of SARE Studio, explains it best: “Mindful consumption isn’t just about reducing waste, it’s about redefining what financial security means. Security is built on clarity, ethics, and long-term intention.”

This aligns with broader sustainability trends. Brands are now expected to go beyond messaging and prove their commitments with real action. Danone-AQUA’s #BijakBerplastik campaign is one example, collecting 31,500 tons of plastic waste in 2024 while involving 25,000 waste pickers. Such initiatives resonate because they align with Indonesian Millennials and Gen Z finance values of transparency, sustainability, and responsibility.

Entrepreneurship as Financial Empowerment

Facing limited job security, many young Indonesians are turning to entrepreneurship. Side hustles, digital businesses, and freelancing are not considered backup plans but essential pathways to financial independence. The report emphasizes how self-employment empowers individuals to take control of both income and identity.

For Gen Z, in particular, entrepreneurship is not just about earning money. It is also about aligning work with personal passions and values. From selling thrifted clothes online to starting creative agencies, youth are carving out alternative economies. This reflects a broader rejection of rigid corporate structures in favor of autonomy and flexibility.

Still, entrepreneurship also carries risks. Without safety nets, failure can lead to debt or instability. This is why calls for institutional support—such as accessible loans, mentorship programs, and stronger regulations—are growing louder. To sustain this momentum, Indonesia must invest in ecosystems that make entrepreneurship viable long-term.

Ethical Finance and Institutional Trust

Trust in financial institutions remains a challenge. Many Millennials and Gen Z express skepticism toward banks, insurance providers, and investment firms. This mistrust is rooted in perceptions of inefficiency, high fees, and lack of transparency.

However, ethical finance models are gaining traction. Sharia-based financial products, modular insurance, and community-driven savings groups offer alternatives that feel more aligned with values. The report emphasizes that Indonesian Millennials and Gen Z finance must be viewed not only as an economic matter but as an ethical one.

Regulators are also taking note, with increasing attention to digital credit and consumer protection. Building trust requires transparency, accountability, and solutions that reflect the lived realities of young Indonesians.

Conclusion: Finance as a Reflection of Values

The 2026 report makes it clear: financial behavior is not just about money—it is about identity, resilience, and meaning. Millennials and Gen Z in Indonesia are not passively adapting to economic instability. They are actively reshaping finance to align with values of balance, transparency, and sustainability.

By redefining success, embracing mindful consumption, and experimenting with entrepreneurship, they are building financial systems that serve both personal wellbeing and collective progress. In the end, Indonesian Millennials and Gen Z finance is less about wealth accumulation and more about financial clarity, ethical choices, and intentional living.

Sources:

• IDN Research Institute. Indonesia Millennial and Gen Z Report 2026.
• World Bank (2024). Indonesia Middle Class Population.
• Institute for Demographic and Affluence Studies, 2024.
• Danone-AQUA Sustainability Report 2024.
• Zapfinance (Prita Ghozie), Financial Wellbeing Insights.