Gen Z, those born between 1995 and 2010, are defined as digital natives and truth seekers on a quest for information and individual expression.
They’re also extremely pragmatic – which might be why they’re such good savers. According to a recent study conducted by the Student Village research agency, nearly 40 percent of Gen Z students are saving 20 percent-40 percent of their monthly income, with one in five saves 40 percent-60 percent of it.
So, what is it that makes Gen Z’s money approach different from past generations?
Student Village research agency Chief Executive, Ronen Aires said, "This is a crowd who show greater responsibility in managing their debt and are spending less on cars and motorbikes, which are viewed as unnecessary in the pursuit of independence".
So, what can these savvy youngsters teach other generations about smart financial behaviour? Capitec elaborates on the trends seen amongst Gen Z clients:
Gen Z is focused on saving: Reports show that as Generation Z’s income increases their spending remains consistent, but the amount they put away each month for saving increases. Gen Z are rebelling against the ‘consumerism’ mentality and are rather choosing financial security over flashy cars and other luxuries.
Financial tip: Capitec says Gen Z-ers know that part of the art of saving means choosing the right vehicle to ensure you get maximum return on your money. Placing your money in a bank account does not necessarily mean that it’s earning interest. For instance most transactional accounts don’t offer any interest and not all savings plans are created equal. Capitec clients earn interest on their transactional account. They also get access to four free savings plans, which offer up to 8.8% interest per year.
A savings calculator helps to determine what savings contributions and plans make the most sense for your goals.
Gen Z boasts an entrepreneurial spirit: While their primary income source remains their parents – the oldest Gen Z-er is only 24, after all – the students of this generation are working towards being self-sustainable in the future. A High School Careers study showed that 64 percent of students in this cohort want to start their own business. They are also saving to reinvest rather than spend. Their largely independent and entrepreneurial mind-sets suggest they highly value freedom and the opportunity to explore what excites them most in life.
Financial tip: Technology makes it very easy to earn extra income through your unused resources. Airbnb, Uber and apps that let you rent out excess storage space are all ways to earn money with very little effort.
Place the money you make from your side hustle into a savings plan rather than using it for everyday items such as clothing. The money will then earn interest and you’ll have additional money to grow your side hustle, increasing your earnings potential and ability to reach your goals.
Gen Z is tech savvy: Gen Z was born into a society were technology is common place and an enabler of most day-to-day activities. This has led to them being quick to embrace new technology. However, the wide array of technology available makes them picky customers, with them favouring innovation that helps them to simplify their daily activities.
Financial tip: Technology can greatly assist you to manage your financial life better. Use your bank’s app anywhere, 24/7 to budget, easily keep track of your finances and save.
Capitec has welcomed almost half a million Gen Z customers in the last 6 months. They also have over 5.2 million digital clients making them South Africa’s largest digital bank.
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