Money Moves Gen Z is Making (That No One Saw Coming)

Money Moves Gen Z is Making (That No One Saw Coming)

Before we start discussing the fascinating world of Gen Z finance, and more specifically the Gen Z financial future of this generation, it’s worthwhile remembering what Gen Z is defined as. This is anyone born between 1996 and 2010, so those aged between 15 and 29. This is important as we need to remember what has happened during this period, and how young investors will have different outlooks.

The Gen Z experience

For one, Gen Z have a different outlook on world events. The oldest members of Gen Z were five when 9/11 happened, and not much older during the financial crisis of 2008. These are people who, at their oldest, were 20 when Britain voted to leave the EU, Donald Trump was elected US President (the first time around) and terms like “protectionism” and “fake news” entered our daily vocabulary. They have also grown up around technology, with nearly none of them remembering a time before the first iPhone was released (2007, in case you were wondering) or now antiquated concepts like landlines and dial up internet.

These young investors will also have fared with different economic realities. House prices when Gen Z was first being born averaged at £100,000 in the UK and are now an eye-watering £270,000. In that time, affordability has changed entirely, and Gen Z face a very different financial future in terms of how much they can earn, deposit for a house, put away for retirement etc. This is already changing Gen Z attitudes to finance, as these savers and investors have grown up during very turbulent times – they’ve experienced, in only a few years, the COVID-19 Pandemic, Brexit, Two Trump Presidencies, Russia’s invasion of Ukraine and soaring inflation to name a few challenges. Oh, and they’re now worried about AI taking their jobs.

How Gen Z handles money

It can be easy to dismiss younger people and presume some superiority over them. After all, in society we still equate age with wisdom. This is not the case, in respect to finances at least, and some very interesting trends have been revealed in Gen Z financial behaviour.

Gen Z have the benefit of being digital natives, growing up fluent in technology that many older members of society are still adjusting to (or even arguing against). This technology means greater access to information, new ways to view this data and then arrive at conclusions in less time. Past generations had to invest in strictly analogue ways, but what can Gen Z investing achieve with access to a near limitless world of data in instant time?

A recent survey found that Gen Z adults are surprisingly financially engaged, using their knowledge and access to data to their advantage. It was found that over half (54%) of Gen Z adults are already invested, with 26% of that group doing so in the stock market.

Another study found that Gen Z are committed to making financial plans, with 43% prepared to use financial support – in whatever form – to save for the future, with 33% hoping to buy property outright. This also showed that Gen Z are accessing financial services in a very different way to past generations. Nearly one in four young people said they go to financial advisors or professionals for investment advice or information, whereas much fewer (15%) said they would go to social media platforms. Moreover, just six per cent of Gen Z said they don’t seek advice for financial decisions at all, compared to over a quarter of Millennials.

Gen Z's fresh perspective on money

A key thing that becomes apparent in the money habits of young adults is Gen Z are prepared to disrupt and do things differently to their predecessors. Whereas the financial adviser or bank would’ve been the first port of call for millennials and baby boomers, why should Gen Z do the same when a plethora of robo adviser apps have launched? These are aimed at them and are more affordable than traditional financial services.

This is a trend that permeates the industry. Financial services is a meshwork of banks, custodians, platforms, insurers, investment firms, exchanges etc – fintech cuts through this with a cleaner and cheaper proposition. Gen Z come to financial services cold, and with less disposable income, so it’s understandable they would prefer to “cut to the chase.” They are less sentimental about brand names and are also more willing to leave certain institutions based on sustainability concerns, a trend that is accelerating ESG adoption throughout financial services.

Gen Z are also more willing to talk about money. For a number of reasons, money remains taboo in society – we don’t like to ask how much people earn, or what their mortgage costs for instance. Gen Z are more likely to be upfront and transparent about this – for example it has been found that 81% of Gen Z have discussed what they might inherit in the future or the inheritance they’re planning to leave. By contrast, older generations are less likely to have talked about this.

This attitude is refreshing, and one the fintech industry – and by extension, the wider financial services space – would be wise to take notice of. The possibilities with Gen Z are exciting, and we’re interested to see how these trends unfold elsewhere in personal finance, especially in payments.

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