The freaky fact that kids born in the year 2000 are becoming adults this year is enough to remind every older person of their eventual demise. But the years keep turning and Millennials are now well on their way to middle age (the oldest of them being 36!!), meaning Generation Z are taking over as the designated youth generation, as those of us born from 1996 onwards are beginning to enter our early 20s.
As an entirely new group of young adults, Generation Z are entering the market with disposable income at the ready. Their attitudes and how they choose to spend this money will massively impact our economy.
You see, the financial world a generation grows up in influences their approach to money. Way back when the recession hit, over ten years ago now, Millennials were hard-done-by from having to pick up the slack from their parents’ mistakes. But now, the majority of young people can barely remember that time, let alone feel the consequences. They’re reaping the benefits of the now semi-fixed economy where anything feels possible. In fact, Lincoln Financial reported that 89% of Gen Z say they’re particularly optimistic about their financial future.
With that in mind, here’s how I predict attitudes will be different for the newer generation...
Gen Z will take more risks
According to Ryan Brown, CR Myers & Associates partner, “Millennials have done their homework and understand the reality that the stock market is impossible to master”. Having suffered the brunt of the financial crash, Millennials had far fewer job and investment opportunities in their early 20s than their parents’ did and it shows in their attitude towards savings. They have been notoriously anxious about their ability to save anything because they have less disposable cash.
Gen Z, on the other hand, have less of a desire to play it safe. It’s looking like they’ll be a more independent and entrepreneurial generation, with a 26 per cent increase in the number of 16-29 year olds registering as self-employed over the last eight years. What’s a better example of this than the teen who invested his bar mitzvah money into Bitcoin and used the profits to set up a consulting company, single-handedly making millions?
Gen Z will have savings for retirement
Bizarrely enough, the Center for Generational Kinetics reports that 12% of Gen Z say they have already started saving for retirement, despite the fact that the vast majority of them are still in some form of education. While there isn’t yet any data to suggest why this is the case, it's important because as our life expectancy is growing exponentially, we could end up needing to live off our retirement funds until we’re 100.
Gen Z are better prepared to go cashless
With cash slowly becoming obsolete, nobody is more prepared for the switch to plastic-only spending than Gen Z. Studies show that Millennials and Baby Boomers struggle with card payments because it means they spend more mindlessly. Since contactless payments became popular in 2015, Gen Z have never really known any different. Visa are trying to make cash ‘peculiar’ by 2020, and carrying cash has now become so uncommon and unfashionable that anybody with two twenties in their wallet somehow seems suspicious – we often assume that the only people left using cash are drug dealers and strippers.
Gen Z are facing much higher prices though
Similar to the housing market, the tuition fees are now worse than ever. Compared to the chilled out £3k uni fees Millennials had, Gen Z are now facing a whopping £9250 per year, a price tag that is still slowly rising. While this hasn’t affected the amount of young people going into higher education, it is affecting their choices in what to study. More are choosing practical or vocational degrees, such as computer science and engineering, to guarantee them better jobs and higher salaries after graduating.