Some financial companies are already marketing money management apps to Generation Z, the children and teens who will make up the next wave of consumers.
Made up of those born after 2000, Generation Z will be huge. According to Pew Research, it will make up 40 per cent of the US workforce by 2020 – making Gen Z a bigger part of the workforce than either Millennials or Baby Boomers.
Statistics show that Gen Z is an entirely new beast. They’re abstemious (with smoking and alcohol use among young people in the UK at its lowest levels since records began), uber-connected (they spend three hours on average a day online), and sad (levels of depression and anxiety are very high amongst this generation of young people).
But what will this generation know about money, and how can their families help them to save?
1. Fintech will be king for Gen Z
For Generation Z, there’s an app for everything, and children and teens who have grown up with smartphones are unlikely to see the point of going into a bank branch.
Even the youngest members of Generation Z are growing up with Fintech, with prepaid cards with associated apps, such as GoHenry, Osper and Nimbl, targeted at children as young as eight, allowing them to tag their spending and to see where their money goes. As a result, they may be more willing to invest using computer algorithms as they get older, with research showing that younger people are far more likely to trust robo advice than the older generation.
See Muckle’s look at money management apps here
The parents of Generation Z would be wise to use technology to help their children and teens to understand money, rather than fearing it.
2. Generation Z are financially savvy
A survey from the Money Advice Service should overjoy the parents of Gen Z who are hoping that their children will want to keep them in their old age. Nearly all of Gen Z children (95 per cent) agree that it’s important to learn money management skills, and most said they put money away for a rainy day.
Another survey showed that over 80 per cent already have a bank account, with over half of those aged 17-19 using banking apps three times a week.
They’re also cautious, with survey showing they fear debt and already planning for retirement.
3. Generation Z care about sustainability
Sustainable investing is still seen as a niche product, but Generation Z may be the ones who make it mainstream.
Research from Masdar, a future energy company in Abu Dhabi, shows that post-millennials in 20 countries name climate change a bigger threat than the economy, terrorism or poverty and inequality.
And 84 per cent of them expect more investment into renewable energy, with 59 per cent wanting to make sustainability a career choice.
Sustainable funds may become a more popular choice when individuals like this take the reins of their own finances.
It will be a while before Gen Z takes the financial reins, but savvy investors could start heeding the signs now.
Demand for app-based Fintech and sustainable funds looks set to rise, while we could be preparing ourselves for the arrival of the most financially savvy generation yet. For those of us who are Gen Z’s parents, it’s a comforting thought.
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