How to Meet the Financial Needs of the Next Generation
By Nicole Kern, Zogo
October 28, 2024
Understanding the financial needs of the next generation is non-negotiable for any financial institution. Millennials and, more specifically, Gen Z face unique financial circumstances, stressors, and desires that set them apart from previous generations, such as high student loans and gig economy jobs. Don’t forget a preference for tech-savvy solutions as well.
At Zogo, we get it, and we’re here to help you navigate these challenges. In this blog, we’ll explore how you can meet the needs of these younger generations.
Acknowledging Financial Circumstances
Meeting the financial needs of the next generation starts with understanding their unique financial circumstances.
Current financial landscape
Gen Z is far from financially stable. About 60% of those born between 1995 and 2009 live paycheck to paycheck, and around 30% don't feel financially secure. The median income for Gen Z workers is about $37,300. Younger Gen Z workers (ages 16-19) earn around $31,800, while older Gen Z workers (ages 20-24) earn about $38,300. For comparison, the average Millennial earns about $71,566 per year.
Income and employment trends
The job market for Gen Z is unpredictable, dominated by gig economy jobs and unstable employment. Many younger individuals are involved in freelance or gig work, leading to irregular income patterns that make financial planning and stability more challenging.
Debt and savings
Debt and savings are significant issues for Gen Z. The average credit card debt for Gen Z (ages 22-24) was $2,834 in the last quarter of 2023, 26% more than the inflation-adjusted average balance millennials carried at the same age a decade ago.
Another source reports a slightly higher average of $3,262 for Gen Z credit card debt. Additionally, Gen Z carries an average student loan balance of $21,574, adding to their financial stress.
Addressing Financial Stressors
Gen Z is facing significant financial difficulties, but as a financial institution, you have the opportunity to help alleviate these stressors and support their journey toward financial stability. Here are some options to consider.
How to address the high cost of living
Compared to their salaries, the high cost of living is a major challenge for Gen Z. Financial institutions can play a crucial role in helping them manage their expenses effectively.
Offering specialized budgeting tools can help members track their spending and set realistic savings goals. Personalized financial coaching sessions can provide tailored advice on managing living costs and optimizing their budgets.
Additionally, introducing reward programs that offer cashback or discounts on essential purchases can ease the financial burden and encourage smart spending habits.
How to address student loan debt
Student loan debt is a significant burden for many young adults. Financial institutions can start providing relief by offering refinancing options with lower interest rates and flexible repayment terms, making loan payments more manageable. Developing income-driven repayment plans that adjust based on the member's earnings can provide even greater relief.
Additionally, offering educational resources and workshops on loan management, consolidation, and forgiveness programs can empower members with the knowledge to navigate their student loan debt effectively.
How to address economic uncertainty
Economic fluctuations create constant stress for Gen Z, but financial institutions can provide stability and support during these uncertain times.
Offering emergency savings accounts with attractive interest rates can encourage members to save for unexpected expenses, while providing access to financial advisors for personalized investment advice can help members make informed decisions.
Another approach is developing flexible loan and mortgage products that adapt to changing economic conditions. These products can provide a safety net and financial flexibility during economic downturns that Gen Z members will surely appreciate.
Meeting Financial Desires
Financial institutions must meet Gen Z members' specific financial desires to attract and retain them. Here are some to keep in mind.
Tech-savvy solutions
Gen Z expects seamless, tech-savvy banking experiences. Mobile banking apps, digital wallets, and online account management are essential. These tools allow members to manage their finances on the go, providing convenience and efficiency.
Financial institutions can further enhance security and user experience by integrating advanced features like biometric authentication and real-time transaction alerts.
Sustainable and ethical practices
Gen Z values sustainability and ethical practices. They prefer to bank with institutions that align with their values. Financial institutions can attract these members by offering green investment options and participating in community initiatives.
Promoting transparency in operations and demonstrating a commitment to social and environmental causes can also build trust and loyalty among younger members.
Financial education and advice
Providing financial education and advice tailored to Gen Z’s needs is crucial. Financial institutions can offer:
- Online resources: Blogs, videos, and webinars on financial literacy.
- Interactive tools: Budgeting calculators and investment simulators
- Personalized advice: One-on-one consultations (in-person and virtual) with financial advisors
Zogo is another excellent example of a financial education initiative geared toward the next generation. It’s a gamified financial literacy app that rewards users for completing lessons on saving, spending, and managing money.
Strengthen Relationships With the Next Generation
To stay relevant and thrive, financial institutions must understand and address the unique financial needs of Gen Z. By focusing on tech-savvy solutions, sustainable practices, and comprehensive financial education, you can meet the financial desires of these younger generations and help them navigate their financial challenges.
Connect with Zogo to learn more.
Sources:
https://en.as.com/latest_news/this-is-how-much-do-gen-zers-make-per-average-in-every-state-n/
https://smartasset.com/retirement/the-average-salary-of-a-millennial
https://www.experian.com/blogs/ask-experian/research/gen-z-and-credit/
https://nypost.com/2024/05/08/business/gen-z-has-an-average-of-2834-in-credit-card-debt/
About Zogo
Zogo helps credit unions educate, engage and attract young people. Backed by behavioral science research at Duke University, its gamified financial literacy app teaches sound financial fundamentals and rewards users for learning. Their mission is to make personal finance fun, simple, and social. Founded by Gen Zers, Zogo understands what it takes to reach the younger generation.