More than 2 billion people cannot access formal financial services and most of them are located in developing countries. Yet, when it comes to reducing the financial inclusion gap, microfinanceinstitutions are one of the most efficient at helping low-income communities access financial products and services. However, one of the main obstacles microfinanceinstitutions, especially African institutions, […]
The Financial Habits of Generation Z
Generation Z, also known as centennial, represents those born between 1997 and 2012. This is the generation that follows millennials, but unlike millennials, this generation has a very clear stance of finance, something that is definitely important for financial institutions looking to capture their interest and their business.
This generation is growing and many already have a source of income. As their spending power increases, so does the weight of their financial decisions in the financial industry. In fact, by 2020 more than 2.6 billion people will be part of generation Z and, by 2025 they will be the largest age group in the world, amounting to 29% of the total population.
Knowing this, in order to attract this generation’s business and provide them with the right products and services, financial institutions must have a better understanding of what this generation cares about, what motivates them and how they operate. Learn more about the financial habits of generation Z below.
What generation Z are all about
After bearing witness to the problems faced by millennials during the recession, centennials began taking an interest on their finances from a very early age. In fact, according to a report by RaveReviews, by 10, they already had their first savings account and have begun saving for college. By 13, they start researching finance. By taking these steps, 89% indicate they feel empowered by the steps they take to ensure their financial stability.
Most studies focused on this generation conclude that centennials are incredibly pragmatic, they’d rather be financially secure and stable than being entrepreneurs, they value personalized communication and use social media to build their own personal brands. Generation Z was raised surrounded by technology, which is why they prefer to interact through this means, looking to create strong, secure, authentic, free digital experiences.
Consider the following data collected on centennials:
- 98% have a smartphone.
- 85% learn about new products via social media.
- almost half of them spend an average of 10 hours a day in front of a screen.
- 71% spend approximately 3 hours a day watching videos.
- 67% prefer to see real people in ads.
- their attention span is 8 seconds.
- by 2020, this generation will amount to 40% of consumers.
- 72% say cost is the no. 1 factor they consider when making a purchase.
- 47% use their smartphone inside stores to check prices and ask their friends and family for advice.
When it comes to financial literacy, generation Z is extremely curious and interested in learning how products and services. They worry about planning their financial future and for not spending their money on unnecessary or extravagant things, but above all, they worry about saving money. Furthermore, according to the American Psychological Association (APA), debts are a serious source of stress for this generation.
Despite this constant need to be more prepared, a study conducted by EverFi indicates that their financial knowledge isn’t actually as good as they expect. In fact, 50% don’t know how to estimate their net value, 4 out of 10 has never created or stuck to a budget, 1 in 4 shops to feel better, only 6 out of 10 are able to cut their expenses when resources are low and a high percentage doesn’t actually know how to estimate the impact of inflation on their savings. All of these facts simply show that they still have a long road ahead in terms of financial literacy.
Without a doubt, this generation is complex, but they have a clear, well-defined mindset that can be attracted and won over. Generation Z has a lot to learn, and it is precisely at this point that financial institutions can start assisting and providing the advice centennials crave so much in order to achieve their financial stability and independence.