In today’s observation we share insights gained from our recent 30/30/30 Project on what Gen Zs relationship with money is, especially their saving habits.
Continue reading, if you want to know what we learnt about what drives this generation to save and what this says about the kind of future they imagine for themselves.
What we learnt:
It was surprising to note that 63% of the young people we surveyed save money. Many didn’t indicate what they were saving for. Of the 15 that did, this is what they are saving for:
“I do have those rainy days every now and then. There are times when it’s mid-month and I need to get to school and maybe my parents haven’t been paid yet and I have to tap into my savings if they gave me enough money already. I can’t get to school. That’s one of the reasons why I save. Currently, I am saving for a car.” – Sunita Khan (22, Mixed Race, female)
Lerato* is a 27-year-old black female who plans to retire at around 45 years old. She is aggressively saving towards retirement and travel:
“ Before retirement age, so somewhere around the age of 45. So that I can actually go pursue my dream job because I believe that by that age, or by that time, I would be in a position to do whatever I want, whether there’s income coming in or not. And that’s why there’s aggressive saving happening while I’m still in corporate at the moment.”
“There are travelling savings. Because I do want to explore. My husband and I had agreed that before we have kids, we at least want to travel to Europe, Dubai and America. So, yes, we do have a savings account that contributes to that. Even if it’s mini trips to Sun City or Cape Town.”
“I’m really encouraged at the levels of saving. Even if it’s saving towards the next purchase, there is that muscle that they’re learning to use.” – Ronen Aires
What does the research/experts say:
Generation Z is said to be the most financially savvy generation. According to The 2022 Investopedia Financial Literacy Survey in the US, Generation Z adults prove to be more financially sophisticated than any previous generation was at their age. A February 2024 study by the Investment Company Institute found that “Gen Z households in the US have nearly three times more assets in the [retirement] plan accounts (adjusted for inflation) than Gen X households did at the same age.”
According to a June 2023 study by Nedbank, “68% of young adults are now saving on a monthly basis, with an additional 7% saving weekly.”
An August 2023 Sanlam retirement survey found that South Africans give low priority to retirement. Education and entrepreneurship rank higher. Farzana Botha, segment manager at Sanlam Risk and Savings says, “Young people especially are committed to empowering themselves through educational and entrepreneurial pursuits. Self-education as a new certification, degree or diploma ranked as the top priority at 37%, especially for 25-34-year-olds. While black respondents comprised 54% of the total sample, they made up 68% of the participants who put education as their number-one goal. Being on track to retire comfortably took seventh place in a list of eight defined priorities. For young people in particular, it’s just not a consideration right now, showing the vital need for retirement planning to be reframed to be more relevant.”
Globally, the FIRE (Financial Independence, Retire Early) movement of aggressive saving seems to be losing steam in favour of a new trend called ‘Soft Saving’, where Generation Z is taking a more relaxed approach to their long-term financial security. Gen Zers can not afford to save for retirement even though many would like to retire early.
“It’s not that we don’t care about retirement or that we’re not interested in having financial literacy. We just have a different — say, realistic — approach to saving money,” says Liliana Hall – personal finance journalist.
What can businesses and policymakers do about this?
These young, fiscally responsible people are not prone to spending frivolously. They make considered purchases. Brands need to convince these consumers why they need to purchase their goods or services. When buying something new, they are likely to value recommendations from friends, family or social media rather than making a blind purchase. Make sure that your company has positive reviews on your website and Google. Include individual product reviews on your website as well.
As employees providing quality financial literacy education for young employees will encourage them to save and invest their money wisely. Many Gen Zers look to TikTok for financial advice, but this source may not be the most reliable.
Beginning financial literacy education at school will play a key role in getting young people to recognise the importance of saving, budgeting and investing. Financial service and fintech companies can develop products and services for Generation Alpha.
Policymakers can help create a culture of saving among young people and set them on a path to financial security and stability. They should offer incentives for saving, for example, matching contributions or tax benefits for young people who contribute to savings accounts or retirement plans.
Automatic enrollment savings plans make saving the default option, increasing participation rates among young people. Companies and policymakers could utilise this form of behavioural nudging.
Financial planning should not be reserved only for the wealthy. Policymakers could provide free or low-cost financial counselling services to help young people develop personalised savings plans and set achievable savings goals. Public awareness campaigns on social media are advisable to promote the significance of saving among young people and to highlight the benefits of starting early.
*not the interviewee’s real name
By Flux Trends
The data and quotes mentioned above refer to a project that we are in the midst of, in conjunction with Student Village called “The 30/30/30 Project” whereby we collected insights from 30 South Africans, under the age of 30, 30 years into our new democracy.
WHERE TO FROM HERE?
Use these and many more insights from the 30/30/30 Project Report to BUILD your team, by booking a Bridgebuilder™ Workshop.
Close the generation gap and dive into the future of work and how to manage it.
Contact Bethea Clayton at connected@fluxtrends.co.za or +27764539405, if you are interested in exploring any of these options with your team or clients.
Image credit: Annie Spratt
