Gen Z Workers See Brighter Futures via Financial Wellness
Generation Z workers (18 to 24 years old) are feeling the effects of the Covid-19 pandemic, especially when it comes to their personal finances. This can have a huge impact on their ability to save for future goals like retirement. Financial wellness programs and access to financial advice are crucial for Generation Z workers as they are just entering their careers.
Many graduate from college and are trying to get a job for the first time. According to a recently published bankrate.com article, Generation Z workers experience “delayed financial milestones and high unemployment”. This is your first taste of financial independence, and it can make a bitter impression.
According to the bankrate.com survey, Gen Z are:
- Reluctance to take on debt: Generation Z workers avoid debt in general and credit card debt in particular. In fact, another Bankrate poll from May 2020 found that 45% of Generation Z had no debt before and during the pandemic. Additionally, 50% of Generation Z workers had no personal debt as of December 2020. In fact, the main debt of this generation was student loans – 24% had debt due to education; only 12% had credit card debt. Both data points come from a CreditCards.com survey cited in the bankrate.com article.
- Not much when it comes to saving either: Like many Americans, the Generation Z cohort is pathetically underserved. In the emergency saving category, 32% of Gen Z didn’t have any before or during the pandemic, and 20% saw their savings decline, according to bankrate.com. Contrary to the data cited above on their reluctance to bear debt, many Generation Z’er turned to their credit cards to absorb emergency spending – predictable behavior for those who don’t have a rainy day fund. However, many other employers are offering Emergency savings accounts as an employee benefit that can help employees top up their emergency savings and retirement accounts. Many employers equalize workers’ emergency benefits by adding money to their retirement accounts on their behalf.
- More responsibility with credit cards: Generation Z workforce finds credit card rewards the most attractive – 36% have this type of card, according to bankrate.com. However, it can take some time to build up a loan that is solid enough to earn these rewards. Nonetheless, 81% of Generation Z say they have no credit on their credit cards. This may mean paying off the cards every month and / or not using the cards they own, preferring to rely on their debit card for everyday purchases.
- Mainly Debit Card Users: In fact, the majority of Generation Z’s prefer to use a debit card to pay for gasoline (32%), groceries (44%), and restaurants (46%). However, credit cards are their first choice for paying for travel, with 23% choosing to use a card to settle flight and hotel expenses. Additionally, Gen Z chose cashback as their preferred credit card benefit during the pandemic.
- To a bumpy financial start: While the pandemic has caused many Generation Z workers to postpone travel plans and vacations, it has had a much more severe impact on their finances. More than half (54%) have postponed a financial milestone such as pursuing career opportunities or buying a car. In addition, 14% of Generation Z’er have moved home.
- Lack of financial orientation: One recently CreditCards.com Survey found that 28% of Generation Z learn about finance through social media. If done right, this can be an opportunity for employers to reach out to them on channels like TikTok and Twitter. However, according to bankrate.com, there are some concerns about the reliability of online financial advice in general. Worse still, 22% of Generation Z workers have no access to financial advice at all.
Employers have the opportunity to make a huge contribution to helping Generation Z access financial wellness programs. It certainly seems that Generation Z needs the help and that they are ready and willing to accept it. Gen Z has a decent foundation – they only need one gentle nudge to go further in the right direction. You can then look forward to an even better and financially secure future. With the help of employers, they have a better chance of getting there.
Steff C. Chalk is Executive Director of The Retirement Advisor University, a partnership with the UCLA Anderson School of Management Executive Education. Steff also serves as the Executive Director of The Plan Sponsor University and is currently a lecturer at The Retirement Adviser University.