Surprised to hear that Generation Z, aged 18 - 25, are among the most financially savvy people in the U.S.?
While Gen Zers are often considered trend-chasers, these young consumers are taking control of their finances at an earlier age than any generation that’s come before. How young? The average age a Gen Zer starts researching financial planning is just 13. And as the largest cohort of U.S. consumers, Gen Z’s interest in personal finances has significant implications for brands vying for their attention, loyalty, and dollars.
To better connect with this generation, retailers first must understand the motivations behind their penchant for personal finance. Growing up in the wake of the 2008 global financial crisis and experiencing its effects on their families set Gen Z up to be financially conservative, with many naming money as their top source of stress. Couple that with the student debt crisis among Millennials, and you have a generation eager to get a head start on their financial futures.
Unlike Millennials, who are known to be collaborative, Gen Zers are fiercely independent and competitive when it comes to success in school, work, and life. This drive to get ahead brings with it anxiety: 72% of Gen Zers say they’re stressed about finances and 51% of Gen Zers are afraid money will prevent them from doing what they want in life. Yet for all their worries, the Gen Zers that are investing their time and effort into their financial futures are set up to be powerful consumers--even more reason for retailers to start fostering connections with this generation now.
As daunting as this may sound, Gen Z’s financial savviness offers real opportunities for brands to empower them by offering flexibility, control, and transparency in the shopping and spending journey. With 89% of Gen Zers saying planning for their financial future makes them feel empowered, giving them the tools to spend responsibly lets them know you understand their desire to manage money wisely.
Given the above, it should be no surprise that Gen Zers carefully balance what they need, what they want, and what they can do without. Overall, 72% of Gen Zers name cost as the most important factor when making a purchase. Sixty percent already have a savings account, and 54% have a checking account, yet only 41% have a credit card. Of the Gen Zers that use Afterpay in the U.S., more than ninety percent used a debit card for their purchase. That means they’re much less likely to overspend and risk going into debt, but also less likely to make the occasional stretch purchase. With that said, Gen Z is a credit-friendly generation--they’re just careful about falling into debt traps. Sixty-five percent of Gen Z is credit active and half have a credit score of 661 or above. (Only 39% of Millennials had the same score or higher!)
Gen Z is more apt to trust lenders with transparent terms, built-in flexibility, and the ability to safely build credit. Traditionally, fee-heavy credit cards were the only realistic way to make a big purchase--like a new laptop for college or furniture for a first apartment--leaving debit-only customers without a means to get what they need. That’s the beauty of the Afterpay model, and why it has been so successful for customers and retailers. Afterpay partners are able to offer budget-conscious Gen Zers with an easy-to-understand installment plan, without the risk of debt or long-term credit commitments. That’s why a quarter of U.S. Afterpay users are Gen Z--and we’re proud to have them.