What the Gen Z can Teach about Money
The Generation Z, or Gen Z — people born between 1997 and 2012, has grown up in an era marked by rapid technological advancements and economic uncertainties. As they come of age, they are not only transforming the job market and societal norms but also imparting valuable financial lessons that transcend generational boundaries.
In this blog post, we will delve into effective financial lessons shared by ‘zoomers’ that can help secure financial well-being and prepare for the future.
Embrace Technological Advancements
Gen Z, as the ‘digital natives,’ have grown up immersed in technology. They have harnessed the power of smartphones, online platforms, and digital tools to explore new financial opportunities and manage their money efficiently.
Embracing technology helps zoomers in accessing financial apps, budgeting tools, and investment platforms that empower them to make sensible decisions and stay on top of their finances.
Start Saving Early
Gen Z understands the importance of starting to save money as early as possible. Whether it’s setting aside a portion of their pocket money, income from part-time jobs, or gifts, they prioritise building a savings cushion.
Cultivating a saving habit early on, zoomers benefit from the magic of compounding, where their money grows over time, ensuring a more secure financial future.
The NAB Australian Wellbeing Survey Q2-2023 indicates that two-thirds of the 18-29 age bracket were already depositing in a high-interest savings account, compared to half of Aussies over 30 years old.
Focus on Financial Education
Understanding complex concepts such as investing, budgeting, and managing debt equips anyone with the knowledge needed to make sound financial decisions throughout their lives.
Unlike previous generations, Gen Z has access to a wealth of information at their fingertips. They actively seek financial education through online resources, blogs, and podcasts.
Some zoomers may claim that part of their financial knowledge came from social media clips or YouTube videos. However, there are some contents that may actually be of questionable quality, prompting ASIC to crack down on so-called influencers.
Minimalism and Conscious Spending
There are those who prioritise experiences over material possessions. Gen Z practises minimalism and conscious spending, focuses on purchases that bring long-term value and align with their values. This approach to spending not only helps them save money but also reduces their ecological footprint, making them more environmentally responsible consumers.
Side Hustles and Entrepreneurship
Zoomers recognise the gig economy as a potential avenue to boost their income. They are keen on exploring side hustles, freelancing, and even launching small businesses. Diversifying income streams can help ensure greater financial stability and flexibility to weather economic uncertainties.
Addressing Student Debt Strategically
Student debt is a significant concern for Gen Z. They approach this challenge strategically by researching scholarships, grants, and financial aid options before pursuing higher education.
Additionally, zoomers seek alternatives to traditional university education, such as online courses and vocational training, to minimise student loan burdens.
Prioritising Financial Security
Some Gen Zs may have been old enough to witness their parents’ woes with money during the 2008 financial crisis and learned the importance of financial security. As such, they are more cautious when it comes to debt, preferring to establish an emergency fund and save for major life milestones like homeownership. This prudent approach to finances helps them navigate unexpected financial setbacks with greater resilience.
Investing Early and Wisely
Zoomers understand that investing is a fundamental tool for building wealth over the long term. They start investing early, even with small amounts, in low-cost index funds or exchange-traded funds (ETFs). This strategy allows them to benefit from market growth while minimising risks associated with individual stock picking.
Writing for the Australian Financial Review in 2021, Alecks Vickovich covered a study by forex broker Global Prime, which had 1,005 Australians as respondents. The data revealed that half of the Gen Zers polled were actively interested in trading and investing starting from the pandemic.
Socially Responsible Investing
Environmental, social, and governance (ESG) factors play a significant role in Gen Z’s investment decisions. They are more likely to invest in companies that align with their ethical and environmental values.
Socially responsible investing allows zoomers to support causes they care about while growing their wealth.
Financial Planning for Retirement
Despite being relatively young, Gen Z recognises the importance of planning for retirement early on. They take advantage of employer-sponsored retirement plans, such as 401(k)s or superannuation in Australia, to secure their financial future in the long run.
Data compiled by communications and research company McCrindle noted that 72 per cent of Gen Z Aussies were determined to buy their own house someday.
Generation Z is rewriting the rules of personal finance by adopting a proactive and tech-savvy approach. Implementing these lessons can help achieve greater financial security and prepare effectively for the future.
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DISCLAIMER: This article is for informational purposes only and does not constitute official financial advice. UBOMI has no working relationships with any company mentioned.