Money Matters: Filling the Next Gen Knowledge Gap
by Ryan Deluchi
Photo by Joshua Rondeau on Unsplash
Gen Z have a complicated relationship with money.
Gen Z research shows that they’ve been raised in a world defined by multiple global financial crises and austerity politics - where living costs continue to rise faster than wages and unemployment remains rife amongst young people.
They’ve witnessed Millennials saddle themselves with student debt, to secure jobs with salaries that often won’t ever stretch far enough to enable home ownership.
Add to that the looming prospect of being the first generation to be worse off than their predecessors financially, and a hypothesis could easily be formed that Gen Z should be the most financially prudent generation yet; a cohort of frugalitarians hellbent on avoiding the pitfalls of their elder siblings and parents.
And yet, this is also a generation feeling unprecedented pressure to buy happiness and with fewer barriers than ever to do so.
In a world lived predominantly online, the perfect life is only a few swipes and a next-day delivery away.
Other generations are better placed to cope with this. They developed healthier shopping habits in their formative years when the path to purchase was far less streamlined. Their experience of impulse purchasing was once confined to supermarket shelves, with bigger ticket purchases necessitating an out-of-town trip or a Saturday spent on The High Street (RIP).
What’s more, Gen Z are disproportionately affected by a lack of fundamental financial nous. In the UK, research suggests that the financial literacy of young people is 16% below the national average.
They’ve been brought up in a world of misinformation, where under 30s are now the most frequently scammed demographic (and you thought it was your grandma that needed help on her iPad?). For many young people it’s often more compelling to get financial advice from a TikTokker promoting the merits of Dogecoin than a trained financial professional.
It seems that as a society we’ve gotten very good at helping young people spend their money, but pretty terrible at helping them save it. Now is the time for the financial services industry to step up to the plate and give the Next Gen the help and support they need.
Key takeouts for brands:
Think bigger
The rise of the neo-bank in recent years has seen a swathe of new functionality aimed at young people. From sexy luminous cards and bill-splitting apps, to slick UX design more akin to helping you find a date than a utility bill, it’s never been easier to manage finances – or at least, that’s how it seems.
But let’s be real for a second – this barely touches the sides when it comes to helping young people become financially literate.
Understanding the principles of compound interest is about a fun as it sounds – but it’s also important. Likewise, a workforce destined to work more flexibly and fluidly than any generation before them would probably really appreciate a crash course in managing taxes and pensions.
Information is not the same as education but financial services companies could help to address both.
They may not know they need help
The knowledge gap seems to exist because of the shared apathy between young people and financial services. In fact, a study this year found that financial illiteracy was only a concern for 6% of Gen Z respondents.
That same study found that Gen Z’s biggest financial worry was not being able to ever own their own home. Of course, there are societal and economic variables at play– but there’s a clear role for financial services companies to help put young people on the right path.
What’s more, this is a generation crying out for direction and someone to trust. Perhaps that’s why 87% of Gen Z are still using a traditional bank rather than a challenger bank. When it comes to money, trust and security still matters (which is particularly good news for the financial institutions that have been around forever).
It’s clear there are hearts and minds to be won by any financial services company – new or old - that can meaningfully and tangibly help this generation achieve their goals.
Get fluent
Online fraud used to mean pensioners inadvertently wiring money to dead princes. But young people are falling for get-rich-quick schemes and crypto-cons because today’s scammers are fluent in the codes and culture of Gen Z - one of the reasons TikTok recently clamped down on financial misinformation on its platform.
Financial services brands will need to replicate this level of cultural fluency to have any chance of successfully pushing a more positive financial wellness agenda.