Written by – Jaya Pathak
Gen Z are the generation of people who are born between the mid of 1990s and early 2010s. This generation is bringing a transformation in the field of digital economy. With the advent and rise of digital banking investment apps and fintech, the economy has changed massively when we compare it to the previous generations. The previous generations focused on the accumulation of wealth as their primary goal. On the contrary, we can see that generation Z is prioritising financial wellness as a part of their self-care routines.
They are not viewing money as a means to an end; rather they are integrating certain financial habits into their daily lives which is fostering their mental and physical wellbeing. In this blog we are going to talk about how the Generation Z is adopting personal finance hacks in the digital first economy.
Gen Z and digital age
Officially, generation Z grew up in the digital age. They are the people who are exposed to the landscape of Internet. They do have a firm knowledge about finance. This financial literacy is the result of online platforms, information gathered through social media influencers and some sort of online forums. This is the generation who has a strong urge to be self-sufficient. They have paved their own paths without relying on others. Therefore, it has become quite obvious that they will prioritise financial independence too.
Digital currency such as cryptocurrency and stock market has become a more likely trend among the Generation Z. They are making bold decisions in these areas. Through the financial literacy, they are seeking for long term profit and short-term opportunities as well. The generation Z is valuing experiences over the possession of any material. The shift can be noticed in their spending habits. They are prioritising travelling, mental and physical wellness rather than accumulation of material wealth. They are making ethical investments; which means that the Generation Z is more inclined towards investing in those companies which align with their value. It is making them a socially civic citizen of the nation also.
Funflation
Economists use this term to depict a recent pattern of change in the behaviour of consumers. It is related to the recent spending trends. It describes overspending on travel or outdoor entertainment despite the rising cost of living. It is putting a challenge to the financial service brands. There is an urgent need to address for offline fund with rewards, which will encourage savings to beat the need of rising inflations. Consumers must aim to make a healthy balance between being extravagant and over spending on fun activities and ensure that money is invested to fulfil some important needs of their life. This approach will help that’s generation Z to maintain secured financial future.
Noticeable points
- According to a data, about ¼ of Gen Zers hold stocks and cryptocurrency.1 out of 10 Gen Zers own NFTs.
- Around 54% of the total population of Gen Zers has some sort of investment.
- Around 1/3 of Gen Zers have a farm knowledge about the basics of financial management such as tax paying and managing the debt.
- Gen Zers with an income of more than $50,000 are more confident in their financial knowledge. Around 57% of them feel confident about their financial knowledge.
- 44% of Gen Z have not invested as they don’t have any idea where to start from.
- 26% of Gen Z adults have invested in the stock market.
Major challenges faced by Gen Zers
- Day to day, higher education is becoming expensive. They feel trapped with loans. This excessive loan amount is posing a significant challenge as it may prevent or delay their financial goals.
- With rising inflation, generation see is facing difficulty in achieving their financial goals.
- With the advent of gig economy and automation, the traditional employment has been completely transformed. It has led to an unstable economic streams and job insecurity.
- As generation Z is quite active on social media platforms, they might get influenced by others to maintain a certain kind of ‘lifestyle’ by overspending and ruining the financial journey.
How generation Z can create a financially secured future?
As we have discussed above that generation Z is facing backlash while managing the loans, inflation and many more. Therefore, there is a need plan some strategy which will help them to build a financial secured future.
- It is quite important for them to firstly understand the concept of personal finance which will build the foundation to financial security. You must have noticed those individuals who want to learn about budgeting and investing. Some educational resources can be engaged to make them financial literate. They can use online platforms which will provide them a comprehensive guide one various financial topics. They can also enrol themselves in financial courses.
- For a proper financial planning, they can create and stick to monthly budget. It will also teach them effective money management. They can also keep a track record on their income and control their expenses. Nowadays, there are various budgeting apps available on Internet through which they can monitor their expenses and maintain a financial discipline at the same time.
- They should focus on ‘saving’ to meet the unexpected need. There are various micro investing platforms on the Internet which will allow you to start investing with minimal amounts.
- They can also use financial management apps through which they can track their expenses and monitor investments.
Conclusion
In a nutshell, generation Z can be termed as the generation of financial consciousness. With the digital approach and urge to financial stability, Gen Z can position them in a good rank in the global economy. They are a powerful consumer group which is bringing massive change in the financial sector.
