How GenZ sees personal finance

How GenZ sees personal finance

By Yashoraj Tyagi, CTO & CBO, CASHe

The world is accelerating. Up until the early 1900s, people could expect to live lives that were not too far removed from that of their parents and grandparents. In fact, it wasn’t uncommon for all three generations across a family to bond over the same things. This started changing acutely in the post-war years as the industrial revolution matured and gave way to the seeds of the information age. As the internet went mainstream, there was a profound alteration of the human consciousness at both the social and the individual levels. It is at this intersection that the first cohort of the much-maligned ‘GenZ’ emerged.

Loosely defined as those who were born between the late 1990s and early 2010s, GenZ is the first generation to have grown up with the internet. On top of that, much of their realities are derived from an increasingly all-digital world: digital watches, pocket-sized phones, access to global television programming, etc.

Much like a modern device, GenZ is part of a generation that is subconsciously a part of a larger culture hive-mind: a collective intelligence where everything moves at light speed, and permanence is all but non-existent. When one grows up under such circumstances, how does one’s idea of personal finance change?

Thinking Long and Short

Growing up in an age of tech-fueled commerce, it’s natural for the younger generation to be all too quick to spend and splurge impulsively. The prevailing marketing and advertising industry has gotten selling and persuasion down to an exact science, and this has started to unravel already. A recent survey by Northwestern Mutual revealed that over half of all respondents believed that making small purchases on a daily basis would have serious implications on their long-term financial health. This flips the logic that this generation is far too flippant with money and is a lot less financially literate than the ones that came before it.

In a study done jointly by and Finimize, 64 per cent of those between the ages of 18 and 29 said that they discussed their finances with their families and friends while 41 per cent of GenZ respondents to a survey by Fidelity said that they turn to social media influencers to aid them in their financial decision-making. Clearly, this is a generation that knows the importance of money and takes full advantage of the tools that are available to improve their financial acumen. Many of them grew up in relatively modest households and had seen the effects of improper financial planning first-hand. As young adults, they seek to start building wealth from an early age.

Fast Times at Global High

GenZ’s precociousness with financial practices is not surprising if you examine the financial landscape that they grew up in. GenZ is the first generation to have witnessed three separate financial crises in the first quarter of their lives. Many are acutely aware of the downsides of not taking care of their finances at an early age. With exorbitant living costs and the highest levels of student debt ever recorded, GenZ is well within its rights to start thinking of retirement the moment they step into their first jobs.

Given the backdrop in which they operate, it’s all the more important for GenZ to adopt solid wealth management practices at an early age. This will not only allow them to reign in their impulsive nature (acquired largely as a result of being digital natives) but will also lay the foundation for future generations when it comes to adopting healthy financial habits.

GenZ’s spending habits are starkly different from their predecessors as they are less inclined towards material goods, and great value investing in ‘experiences’. The ‘experience economy’ was largely a GenZ creation and speaks volumes about the generational shift in spending practices. It is these very habits that inform their preference for asset classes.

Unlike their forebears, GenZ is averse to fixed-income instruments and instead prefers high-risk, high-reward asset classes. Cryptocurrencies, stocks, and NFTs are some of the most popular asset classes among a generation that seeks FIRE (Financial Independence, Retire Early) obsessively.

Financial Growth = Personal Growth

In a world as highly financialised as ours, self-actualisation and personal growth is inevitably tied to the amount of money that one has at their disposal. GenZ understands this intuitively and much of their decisions, be it their preferred choice of work or their financial habits are underpinned by this reality.

The popularity of personalities like the inimitable Naval Ravikant and the stellar performance of Morgan Easel’s ‘The Psychology of Money’ is in no small part due to GenZ’s quest for financial independence. For them, personal growth and financial growth are not mutually exclusive. They are synonymous with individual growth, and more often than not, one and the same thing.

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