Money Freaks Gen Z Out, Creating Opportunity for Financial Marketers
Nothing stresses Gen Z out more than money and debt. Smart banking providers can swoop in with 'Financial Wellness Coaches.'
By Steve Cocheo, Executive Editor at The Financial Brand
Photos of Generation Z that financial marketers often include stereotypical shots of smiling youth in cliché poses and quintessential hairstyles. They’re glued to social media, taking selfies. They seem to have no cares and look like they’ve got it all figured out.
But in reality, this generation is stressed-out. One of the top stressors? Money.
According to the American Psychological Association, four out of five Gen Z consumers ages 18-21 say money matters are a leading source of stress. In their study, more than three in ten Gen Z respondents, personal debt is another major source of stress.
Many members of Gen Z enter college lacking in essential financial management skills, increasing their stress and exposure to personal financial risk. It’s not that they haven’t had any preparation, but that they seem to lack skills where formal financial literacy training meets common sense practical application. Yet their college years, more than ever before, will include financial decisions impacting much of their future adult life.
“Many young adults heading to college do not feel prepared to handle their impending financial challenges and those unprepared students are more likely to experience financial stress,” observes EverFiin their report on Gen Z. “Many of today’s young adults are struggling more than older generations with basic money management and overall financial skills.”
The EverFi study included a short test of financial literacy practical basics that Gen Zers frequently got wrong:
Only 14% know they should have 6-12 months expenses in emergency savings.Only 29% understand that someone with too many credit cards must close the accounts carefully to avoid hurting their credit rating.Around half don’t know how to compute their net worth.Four out of ten don’t know that a late payment sent to a collection agency would stay on their credit history six years or more even after it is paid.Most have no clue how to tell if inflation was outpacing their return on savings.
EverFi says this data paints a rather uninspiring picture. The report suggests that school training in personal finance and economics tends to be seen as an academic requirement, with less emphasis on producing actual financial capability.
As evidence of this:
Four out of ten students with checking accounts admit that they haven’t checked their balance in the past year.Four out of ten haven’t created or used a budget.One out of four buy things to improve their mood.10% admit to buying things they can’t afford.Only six in ten say they stop spending when their resources are low.