Quickly on their way to becoming the largest group of consumers, the world has their eye on Gen Z—the approximately 72 million people born between 1997 and 2012. Not only is Gen Z the largest generation now, they are the most diverse generation in U.S. history. The diversity aspect that hits all fronts of this generation—race, ethnicity, sexual orientation, political leanings—makes it a complex generation to understand. But it is essential for those wishing to reach this generation to gain the right insights into their growing preferences and desires as they come into the height of their spending power by 2026.
In the latest Future of Money Study from Logica Research, we take a 360° look at Gen Z and money. The study examines how Gen Z makes money, spends money and invests money and helps us understand what this generation is looking for when it comes to financial advice and future planning.
Gen Z and Work
If one thing stands out so far about Gen Z, it’s their unique approach to employment. According to The Economist, the ability to work remotely is increasingly non-negotiable, and flexibility is a must for Gen Z. Our study shows that this newly working generation is readily willing to switch jobs if a perceived better opportunity comes along. In fact, they are more willing to switch jobs than any other generation at 63%, followed by Millennials at 57% and Gen X at 37%.
Employers need to be ready with a variety of tools in order to appeal to Gen Z and to retain them as employees. Not only are they looking for flexibility, over 80% of them want their employers to offer programs to help them manage their money. According to Gen Z employees, employers must be ready to give advice on savings, retirement, insurance and managing debt.
Gen Z and Payments
So how are Gen Z spending the money they make? Although this generation is still the lowest spender of all the generations due to their age, the World Economic Forum expects that this will ramp up quickly as they get further into their careers. When they are spending, our study shows that this generation—more than any other generations—prefers to use debit cards. They also use cash. Seventy-five percent of Gen Z use cash because it feels more secure, with 66% using cash to pay because it helps them manage their budget.
This generation is the most likely to use PayPal for online purchases and they also use Buy Now, Pay Later (BNPL) installments to purchase. Some of the services they use or plan to use in the next 12 months include PayPal’s Pay in 4, afterpay, PayPal Credit and Klarna. But this approach to purchasing is not without risk. BNPL use “has led some young shoppers to rack up thousands of dollars in debt and tank their credit scores,” as noted in Business Insider. As Gen Z gets older, our insights from the Future of Money study suggest that they will have a different approach to debt and managing money than older generations.
Gen Z and Investing
On the investment front of our 360° look at Gen Z and money, we see them tend to be more bullish in their outlook. In our Logica® Future of Money Study this generation is more likely than the older generations of Gen X (14%) and Boomers (4%) to invest more in the next 12 months (21%). The Financial Post shares that Gen Z has a greater risk tolerance for investment volatility, and it is not just due to their younger age, it may be that they have learned about expecting volatility from older generations.
Not only are they investing more, they are saving more than other generations due to current economic conditions (51%). In fact, this generation is found to be saving more than they are spending. Gen Zers also are likely to use savvy banking apps that make it easy to save, allowing them to move money around between accounts and quickly see how much they are managing to save on an ongoing basis.
What Gen Z Needs
Gen Z says they are seeking financial advice on savings, insurance and retirement decisions—and that they seek financial advice through a variety of channels. We found they look to family and friends for financial advice first, but then they turn primarily to social channels like YouTube, TikTok and Instagram, while still wanting professional advice.
Gen Z and the 360° View of Money
This generation offers a huge opportunity for financial education on all fronts—from employer programs to payment platforms to investment opportunities. Financial brands will need to work to understand all the financial nuances built into this diverse population and to keep up with their changing needs to reach them with the right messaging, products and experiences.