According to recent research from peer-to-peer lender Zopa, those aged between 18 and 22 – also known as Gen Z – are no longer compelled to rely on their parents to support them financially as 35 percent of the age group and 52 percent of millennials have more than £1,000 in savings. These findings suggest that Generation Z are in control of their financial future and contradict the abundance of headlines that suggest that this generation, in addition to 23 to 28 year olds known as millennials, spend frivolously on Pret A Manger and cannot save.
However in addition to numerous articles on the subject, the Financial Conduct Authority also reported that one in 10 U.K. adults have no savings at all. The FCA also found that in comparison to baby boomers, for Gen Z and millennials, mortgages, student debt and the cost of having a family, will have a stronger impact on being able to put money aside for future generations.
USA Today reported that even if millennials depend on Mom and Dad for financial help, financial independence is what they want – as this is a measure of adulthood, but it is unattainable. Almost three in five said they could not afford their lifestyles without support. Young adults require financial help with phone contracts, food, rent and for those with mortgage payments, two in five got down payments from their parents, according to a Merrill Lynch/Age Wave survey.
The biggest problem is debt. The average loan balance for a graduate is just under $37,000, which would mean a monthly repayment of $371 over 10 years. What the Zopa survey revealed is that these younger generations are also making saving cash a priority. Andrew Lawson, Chief Product Officer at Zopa, highlighted that the research shows that a new agenda is being set.
“With Gen Z showing they are the savviest when it comes to financial control, it may be time to wave farewell to the idea of the Bank of Mum & Dad,” Lawson said. Furthermore, it could be argued that the rise of the fintech industry and alternative ways of managing money has led to younger generations keeping a closer eye on funds and planning for the future using the various apps that are available. What Vytas Taujanskas wrote in a Medium post last year was particularly poignant.
“Contrary to the previous generations, Millennials have a different basis for decision making. They spend less for the luxury things, responsibly estimate when to marry, or to own a house, highlight healthcare much more than Gen X. Therefore, the challenge is to find a key how to meet the different generation Y mind-set expectations in providing solutions to their wealth management.”
Taujanskas continued: “Millennials’ affinity for technology is reshaping the service industry immensely. They are able to access all the information on the web and are prone to compare products using digital tools and find the best value for the best price. Additionally, Gen Y have high standards for the brands they identify with. That is all why a high degree of transparency is necessary. It isn’t hard to do that in the digital world. Showing full details about their spending, disclosing the full cost of the service, showing the alternatives how to save or how to get more value for the money are ways to bring more transparency for the service.”
Zopa found that 70 percent of Gen Z check their finances every day and 61 of millennials are doing the same. 63 percent of Gen Z check their bank accounts on their phones, while 60 percent of millennials use traditional online banking hubs. In addition to this, twice as many millennials would go to a branch to check their balance in comparison to Gen Z. What this is proving is that as new generations grow up using financial technology, the more so financial technology is embraced.
Research also looked into openness to discussing money with family and friends and results found that 73 percent of millennials and 70 percent of Gen Z were happy to talk about managing money. Lawson said that being in control of money is crucial to feeling positive in general and about finances. “As more and more tools come to market to help people stay in control of their money, the generations that are more open to trying new apps and features are getting better and more adept at managing their finances. These tools aren’t just for the younger generation though, you can become financially savvy at any age!”