AUGUST 2018 | UNDERSTANDING GENERATION Z: OUTLOOK ON FINANCES AND FUTURE
Understanding Gen Z's Outlook on Finances
In general, Gen Zs tend to be idealistic about career and finances. Roughly three quarters rate purpose ahead of paycheck.1 This is much higher than Millennials, who are more savvy when it comes to the connection between earning money and achieving goals. For instance, Gen Zs resist borrowing, yet they still want houses and cars. In fact, our study shows that almost all of the Gen Z population expects to own a home and a car, while only about a quarter realize they will need a mortgage or a car loan to do so.
The one financial product this generation knows they will need is a student loan. Forty-one percent think they’ll have to get a student loan in the future, aligning with their Millennial counterparts, of whom 37% have outstanding student loan debt.4 Parents of Gen Zs also feel the student loan pressure. But while 72% of U.S. parents are saving for their child’s education, they are only on track to fill 29% of the cost.5 This will place a huge financial burden on the Gen Z population, and could result in the same live-at-home phenomenon seen with Millennials, who often move back in with their parents after graduation.
Gen Z has little knowledge about traditional financial products like credit cards and checking accounts. The majority of Gen Zs use debit cards (64%), but less than half have checking accounts, savings accounts or mobile wallets. In addition, less than half (46%) report being inside a bank in the past month, compared to 70% of Millennials.6
Gen Zs tell us that their parents, for the most part, take care of their financial needs. As a result, there is an opportunity to better educate them on the value of different financial tools and products. A full 70% are without access to a credit card and most do not even know how credit works. Of those Gen Zs who do have access to credit, only 60% pay part or all of the bill.
Gen Zs who pay part of their bill:
The Gen Z population are idealistic and a bit naive about financial products.
They are different than Millennials, who were more financially savvy at this point in their lives. As a result, financial brands must educate, as well as address the financial needs of this important generational cohort.
The insights for this white paper were gathered using a multiphased research approach.
All references to consumers and population refer to survey respondents, except where specifically cited.
PHASE 1: SECONDARY RESEARCH
Synchrony leveraged existing syndicated and secondary data to identify insights and knowledge gaps before kicking off Synchrony research.
Timing: May – July 2017
PHASE 2: QUALITATIVE
Synchrony partnered with market research and strategy firm Chadwick Martin Bailey to conduct an online immersion with Gen Z participants in four U.S. markets. Subsequently, in-home interviews (ethnographies) and shopping excursions were concluded.
Timing: October – November 2017
PHASE 3: QUANTITATIVE
For comparison, Synchrony conducted a multigenerational survey with over 4,000 respondents.
Timing: December 2017 – January 2018
Click here for an overview of Generation Z.
For more insights from Synchrony, click here.
1Monster.com. Here’s What You Need to Know About Gen Z, Boss. Mack Gelber.
2National Association of Realtors. Nearly All of Generation Z See Homeownership in Their Future, November 6, 2016.
3Autotrader and Kelley Blue Book. What’s Driving Gen Z. March 15, 2016.
4“5 facts about student loans.” Pew Research Center, Washington, D.C. August 24, 2017.
5Fidelity Investments, 2016 College Savings Indicator Study, August 25, 2016.
6The Center for Generational Kinetics. The State of Gen Z: Meet The Throwback Generation. January 2017. National Research Study. http://genhq.com/gen-z-2017-research-white-paper/
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