Millennials might be the world’s most powerful consumers, but Generation Z is leading the way when it comes to money. Our youngest generation is reshaping the economy, leading an evolution that could put an end to things as we know them. Unlike Millennials, Generation Z doesn’t dread the road to adulthood. No, Gen Z-ers are ready to face the financial challenges associated with growing up. They learn from the mistakes of their elders, always observing and analyzing.
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Introducing Generation Z: Who are they, anyway?
Commonly referred to as the Digitals, Generation Z is the generation succeeding Millennials. Born somewhere between 1995 and 2015, these people are between 5 and 25 years old. They’re early mobile adopters, are used to messaging, expect and even demand fast connectivity, and want only on-demand content. Surprisingly or not, Gen Tech prioritizes money and doesn’t let spending get out of control. These are the words that pretty much sum up Generation Z.
Fewer student loans, more money to pay for education
Generation Z doesn’t even think about taking out student loans. No, their plan is to save money for future education costs. What’s more, they’re thinking about working while studying. The result is that Generation Z owes less student debt. Teens and early twenty-somethings are responsible for money, and this is because they grew up during the recession, witnessing how their parents struggled to pay the bills at the end of each month. Generation Z learned that you can’t live on averages.
They’re extraordinarily cautious and do everything in their power to achieve financial security. Youngsters are also showing considerable differences in their credit profiles as compared to Millennials. They don’t borrow more than a few hundred bucks. They prefer securing payday loans when they’re dealing with financial emergencies. Interestingly, more and more people turn to this type of financing, seeking smarter loans and being very careful with regards to the lending criteria. They don’t rack up massive consumer debt.
Using the buying power to determine brands and companies to change their values
Older generations didn’t have the option to shop online. Generation Z, on the other hand, orders everything online. The young population rarely steps inside physical stores. The digital generation, i.e., the current wave of shoppers, isn’t interested in spending its hard-earned money pointlessly. Why? Because Generation Z is pragmatic. What they want from brands and companies is value. Teens and early twentysomethings are willing to buy more expensive things, provided they last longer.
Numerous studies focused on this generation concluded that Generation Z are extremely pragmatic; they’d rather choose financial power than being entrepreneurs. They value personalized communication and often rely on social media to develop their own personal brands. Centennials were raised surrounded by technology, a reason why they prefer to interact through this means, seeking strong, unique and free digital experiences. When looking at the financial habit of Generation Z, we can see a tremendous curiosity for how services and products work:
- 98% use a smartphone
- 85% use social media to find new products
- Almost 50% spend an average of 10 hours a day in front of the screen
- 67% prefer to see real people in ads
- 47% use their smartphones in stores to verify prices and ask their family for advice
We’re currently experiencing a revolution, one that is forcing organizations to rethink their strategies and come forward with a better proposition. Gen Z-ers want to feel empowered, so they already have dollars and cents on their minds. Sometimes, they turn to payday loans to fill in the gap, but not for things they don’t need in their lives, such as new clothes or overpriced hotels. Brand loyalty isn’t what it used to be anymore. Nowadays, organizations and companies that want to attract Generation Z have to work harder to earn their trust.
Generation Z worries about not spending enough
Even though they’re extremely curious and interested in learning how services and products work, they worry about not spending their money on unnecessary and extravagant things, but more importantly, they worry about not saving money.
But despite this constant need to be more prepared, an EverFi study shows us that their financial know-how isn’t as good as they think. That being said, almost 50% are unable to estimate their net value, where 4 out of 10 never created a budget and only 6 out of 10 are able to reduce expenses when resources are low, and a great percentage doesn’t really know how inflation affects their savings. These facts are only proof that they still have much to learn in terms of financial literacy.
Why do they need financial literacy programs?
They are set to be the largest generation, and within a decade, Generation Z will hold more buying power than Millennials and Baby Boomers altogether. This means that with a lack of financial information, rapidly changing financial rules and a shift in how services are distributed and produced, this generation must know and do way more than past generations. Financial literacy programs in schools will allow Generation Z to explore and determine their needs right before they take on the financial obligations themselves.
Generation Z doesn’t seem to face big money problems as they have the advantage to access greater opportunities, both in the economy as well as in a more traditional business setting where the need for tech savvies is ever-growing. In financial terms, they are better off than millennials. But why? Young people today grew up listening to the warning tales involving either their siblings, neighbours and relatives and watched how media sources stressed the unfavourable financial realities. Bearing that in mind, the way Generation Z is choosing to navigate their finances, it makes sense that sooner they could become some of the most successful professionals we’ve seen in a long time. But until then, they might still have time to catch up and learn how to secure their financial future.
