The Contradictions of Gen Z Financial Literacy: how can financial services brands build a connection?

Much has been made about the fact that Gen Z are coming of age in a deeply challenging financial landscape. As this much-discussed generation begin to transition into financial independence, only now are we starting to understand the impact of these formative experiences on their financial outlook and capability.

In this piece, Dan Cooper explores the curious collision of savviness and naivety that exists across this new generation of financial decision makers, and considers what this means for the financial services brands trying to establish meaningful connections with them.?

As part of a recent response to a client brief, we put out a call to our Gen Z colleagues, asking if they’d mind answering a few basic questions about their financial lives – their outlook and strategy when it comes to daily money management, and their take on the way in which their relationship with money and spending is perceived by older generations.

Much of what came back, though sobering, didn’t necessarily surprise – responses brimmed over with frustration at the unfairness of their financial handicap, and outright anger at the ‘work-shy snowflake’ tropes that appear all too often across the mainstream media discourse.??

The unexpected investors?

But hidden amongst the more obvious stuff was a small detail that instantly raised eyebrows; of the 8 colleagues who replied, 7 of them were actively investing. “I use Trading212 as a platform for investing as it allows commission-free trading, as well as fractional share ownership which can reduce the high entry price of investing in some equities”, claimed one recent graduate.

As someone who’s just entered their forties, I’d love to hide the fact that I had to Google approximately half the contents of that sentence on receipt, but I’m willing to sacrifice my dignity in order to make the point: compared to me and my fellow geriatric millennials, these guys really know their stuff.?

Not that we should be surprised. Between the cost-of-living burden, an increasingly unobtainable housing ladder and unprecedented levels of student debt, the hostile financial landscape that Gen Zs have to navigate has been well documented. In a system that has increasingly stacked the odds against them, we’re seeing Gen Zs being forced to evolve in response.

With a salaried job no longer the guaranteed ticket to unlocking life milestones that were once assumed and expected, many are being forced to explore alternative, supplementary ways of keeping the money rolling in. If I didn’t feel out of touch already, then sitting in a recent focus group listening to 22 year olds talk like seasoned pros about investing in classic cars and precious metals most certainly did the job.?

But what about the basics??

And yet… all isn’t necessarily as it seems.

Those same macro conditions that are fostering the aforementioned entrepreneurial skills are also blunting and diluting financial confidence and savviness in other areas of Gen Z lives.

Recent estimates suggest that over 30% of Gen Zs in the US still live with their parents – numbers that dwarf those posted by previous generations. This creates lower levels of financial independence, and anecdotal evidence we’ve gathered across recent work with Gen Z suggests that this is creating a curious hybrid; a younger generation who are highly attuned to the possibility of new and innovative income streams, but who often feel ill equipped when it comes to establishing the basic foundations required for financial autonomy.

Issues such as understanding & managing debt and establishing coherent saving strategies have occupied plenty of airtime in recent qualitative work, with Gen Z respondents conscious of the need to wise up, but not always sure where to turn for guidance.?

All of which creates quite the challenge for financial brands looking to engage with an audience whose spending power is set to increase by over 400% across the upcoming decade.

When it comes to brands engaging Gen Z about money, decision makers need to be willing to discard cliched Gen Z preconceptions, and instead get their hands dirty getting to grips with a messy and, at times, contradictory reality.

Empathising with their challenging context, recognising their streetwise approach to income generation, but remembering to create safe spaces for them to cultivate basic core skills – it’s a real tightrope. If you need help walking it, we’d love to hear from you.??