Farzana Botha, Senior Communications Manager at Sanlam Risk and Savings
Gen Z is already developing a reputation for being a financially optimistic and conscientious generation of potential super-savers. Could their current healthy financial habits mean they’re on track to be the country’s first generation to retire comfortably, on average? Possibly. On the other hand, this generation could redefine retirement and choose not to retire. Irrespective, Gen Z’s current conscientiousness is something to celebrate.
Farzana Botha, Senior Communications Manager at Sanlam Risk and Savings, says Gen Z’s digital astuteness is probably behind its financial savviness. This generation gleans over 50% (Wall Street Zen suggests 76%) of its financial know-how from TikTok. “Social media amplifies awareness and creates a ‘colony’ of shared values for young people, encouraging participation and financial learning. “Tax Tok” for example, is trending, and everyone’s talking about it. Gen Z wants to be part of the conversation. This generation is awakened and aware, which is driving positive financial behaviours.”
Gamifying virtuous cycles
Gen Z seems to be astute at financial goal setting and driven to learn. Where this generation – and many others before it – fails is in consistently tracking progress towards reaching said goals. Botha suggests getting granular. “Have a system to draft goals for the short-, medium- and long-term. Compartmentalise these and plot them on a road map with milestones for your future self. Regularly review them to ensure they’re still relevant to this period of your life. Use tech to track your progress – from digital goal setting to budget tracking tools.”
Social status is also a great driver of performance. Botha adds, “If young people can benchmark themselves relative to their peers, this can create a level of comparison and gamification to incentivise keeping their goals going. What are other people their age prioritising in this life stage?”
She adds that Gen Zs tend to be hugely self-directed and self-reliant. “For them, it’s an ‘I’ thing. ‘I need to decide what’s right for me’. They need to have options so they can choose what to be part of and how they want to hold themselves accountable. Everything must be by their design. The financial services sector needs to prioritise this and provide these choices.”
Answering openness with the right advice
Botha says Gen Z’s constant exposure to real-time financial nuggets of information online spurs curiosity, but they can take this further. “I think it’s very important that Gen Zs have a professional financial adviser in their corner to deepen their knowledge and help flesh out a plan specific to their individual goals and circumstances. The right advice will help Gen Zs hack the system. For example, they may understand the principles of investing but need help structuring their taxes in the right way. It’s about getting their money to work harder for them so they can level up their financial game.”
Gen Zs have seen the impact of an unprecedented pandemic, along with financial crisis. They’ve witnessed how fast things can go awry, which Botha believes has made them more cautious and committed to making sure their money is giving them robust returns. “Research suggests they also want to create social impact. Additionally, they may not see themselves in traditional retirement. Research has found this generation’s side hustle ‘game’ is strong. They may carry this flexibility and entrepreneurial mind-set into retirement. An adviser will need to be cogniscant of these attributes in Gen Z clients. Financial planning for this generation needs to be tailored and niche to match the nuanced way Gen Zs are making an income and what they value as individuals.”
Gen Zs also seem more open to speaking about finance – these conversations have been increasingly normalised by social media platforms. Botha encourages Gen Zs to learn from previous generations, “In trying to do better than previous generations, Gen Zs may miss valuable lessons. Rather, try to be the gatekeepers of the lessons that serve you, and carry these forwards. Freestyle it! Add your twist and make healthy financial habits your own.
Gen Zs, with their openness and eagerness to learn, can play a pivotal part in leading these conversations and making money talk less taboo.
ENDS