|Momal Khan, Co-President|
With the worldwide shift towards self-service, automation, and digital banking, financial literacy has become more important than ever. This holds especially true for Generation Z, as the older half of the generational cohort is either entering, currently in, or just graduated from university.
Born after 1995, Generation Z was the first to grow up surrounded by the internet, smartphones, and computers. While Millennials have been in the spotlight for quite some time now, the focus has shifted to Gen Z, as they enter adulthood and are now facing the kinds of financial decisions their parents may have never had to.
Anxieties about personal finance are running especially high amongst young Canadians, as many worry about making their rent and bill payments, and managing student loans in the midst of a pandemic. This is combined with the fact that the majority of us grew up seeing and learning about how the older generations navigated recessions, the housing bubble burst, and other economic hardships. and seeing millennials struggling with college and other financial debt.
Generation Z is set to be the largest generation and within a decade will own more buying power than Millennials and Baby Boomers combined. However, without the right financial knowledge, it may become very difficult to navigate the rapidly changing financial rules, especially given the increasing shift in how financial services are produced and distributed. To summarize: Gen Z has to be more financially self-sufficient than any other generation.
While many may turn to robo-advisors to take care of their finances, or seek out help from their parents, this may not prove suitable in the long-term since the financial climate now is much different than in earlier decades. Many of the Baby Boomers and Generation X adults grew up with different financial information, and comparably less sophisticated options for savings, retirement, mortgage, and loans; they may not fully understand their financial options themselves.
In the new age of shopping, where almost any product imaginable is just a click away, it has become easy to take on unnecessary debt when purchasing things online. To manage this, many have turned to primarily using digital payments and money management apps to track their spending.
“The adoption of digital payments has accelerated over the course of the pandemic for reasons beyond convenience alone,” says William Keliehor, Chief Commercial Officer, Interac Corp. “In fact, our research reveals that younger Canadians value digital payments for the insight they provide into their spending habits and are turning to debit payments as a money management tool.”
Banks also realize this newly growing customer base and how important it will be to strengthen their relationship with Gen Z clients to retain them in the long-term. In many ways, Gen Z is fairly aware of the options they have available and the various ways they can manage their finances in a self-sufficient manner. However, it is also important to seek out help and personalized assistance when needed. Discussing the different ways in which such financial assistance can help them achieve heightened understanding of their choices is an important step in improving financial literacy. It will also allow improved and more personalized loan options, bank accounts, and other services to drive positive engagement with financial institutions- the type of engagement that works to their benefit in the long run.
As we navigate such uncertain times, juggle multiple responsibilities, and make the transition to the professional world, it has become increasingly important for Gen Z to seek financial literacy to improve our relationship with money and have financial independence.
For more information on managing your personal finances, resources, and workshops, check out Mac’s Money Centre.