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Collectively known as Gen Z, this is the generation who were born between the mid-90’s and the mid-00’s. Accounting for 32% of the global population as of 2019, this Generation thinks about life, and money, differently from their predecessors.

Coming of age in a brave new world, throughout their childhood, Gen Z have seen first hand the impact of the economic crash and it has coloured their view of the financial world. As the first true digital natives, they have different parameters for choosing how they save, spend, and invest their cash.

How they're spending

As Gen Z start to enter and bed down into the workforce, their spending power is increasing. They are currently thought to be worth an estimated $143 billion in the US alone, and to account for 40% of all consumers by 2020. This huge economic power will only increase as they grow in the workplace and climb the corporate ladder.

In terms of spending habits, whilst they are doubly likely to shop online than millennials, more than half of them prefer to shop in physical stores. However, perhaps due to the financial crisis in which they grew up, 72% say that the cost of a product is the most important factor when buying something. Although it is worth noting as an example of society’s gradual movement toward responsible consumerism, that 55% of Gen Z say they think it’s important that brands are eco-friendly and socially responsible.

How they’re saving

Despite the fact that this generation is clearly gearing up to be the next economic powerhouse, and the fact that as a collective group they are still relatively young, 60% of them own a savings account already.

Indeed, the average age for a Gen Z individual to begin researching financial planning is 13. However, 46% of them haven’t been inside a bank within the last month. This implies that these digital natives are saving conscious, are aware of the importance of starting young and building their wealth over time, and are most probably banking digitally with new interrupter banks, instead of in person at more traditional institutions.

On the flip-side of saving, 23% of Gen Z believe personal debt should be avoided at all costs, showing themselves to be far more conservative about debt than either their parents or the preceding baby boomer generation.

How they’re investing

Whilst the oldest Gen Z member can be around twenty-six, the youngest can still be as young as 3. For this reason, it’s difficult to speak about their investment habits as an entire generation, as many are too young to have begun investing. However, it is precisely because of their young age that they should be thinking of investing as soon as possible.

The younger a person is, the more risk they can, theoretically, tolerate. This means young Gen Z individuals can invest in higher risk products earlier on in their life, and capitalise on a much longer period of compounding before they will need to liquidate their assets.

The numbers we have for those who are investing point to a generation who choose their loyalties carefully; being more likely to invest in, or buy from, companies who promote social change. They are also more likely to trust and put their money towards brands that are promoted by high value and well respected influencers like Christian Ronaldo or Kylie Jenner.

Infact, Bloomberg’s recently constructed hypothetical stock portfolio, called ticker GENZ, was created with Gen Z’s most popular brands, and weighted in accordance with the importance of their associated influencer. Tellingly, since the start of 2018, the fund has outpaced the gain of the S&P 500 over the same period. This could well be having investment companies and banks alike thinking about the future.

What does this mean? Well, it means that the future of financial services could be very different than they are today. With a whole generation of young people demanding companies and services that reflect their beliefs and lifestyles, savvy businesses will be happy to adapt and grow in order to meet the demands of their biggest demographic. In fifteen years time we could have Gen Z to thank for a financial services industry that does exactly what its users need, on a personalised, bespoke level.

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