The generation is working and earning. Here’s where their money goes.
While there are plenty of internet memes bashing the new lifestyle of the millennials, many people forget that this age cohort is already entering their mid-life years. In fact, there’s already a new generation in their twenties, who are beginning to have a larger and larger influence on the global culture and economy – Generation Z. And we’re going to dissect their spending habits and financial practices right here!
Gen Z Basics
Do you know how much purchasing power Gen Z has on a yearly basis? Get ready for this – a whopping $45 billion. That’s right, these are far from babies living on their parents’ dime. If you take a look at this demographic group, you’ll find that their daily habits influence marketing and branding more and more; which makes them worth exploring.
So, what is the group that has followed the millennials like? Well, firstly and most obviously – they’re young. And unlike the millennials, they’re less afraid of spending money on a whim; but they’re still adept at maintaining a solid bank account. It seems that the millennials’ focus on financial education for their teens has paid off. Though, they pretty much want to do the opposite of the student-debt-ridden millennial generation; which isn’t bad in and of itself.
In order to understand how and why Generation Z members spend their funds, let’s take a look at how and why they buy things – and how their habits differ from millennials in that regard.
Now, let’s dive into what they purchase, or plan to purchase and how these habits vary from millennials. First of all, Gen Z has a certain general sense of pride in owning things. Unlike the millennials who are used to renting and leasing everything; Generation Z wants to own their own car and even a home way down the line. Seeing as this is a group that’s born between 1995 and 2010, these are quite lofty aspirations.
But that’s definitely a general trend in their generation, seeing as an automotive study on Gen Z revealed that more than 90% of them have, or plan to have a vehicle of their own. In fact, just for owning a car, many of them would sacrifice relative luxuries like new clothing or a new cellphone.
As you might imagine, Gen Z like hybrid cars, and are more concerned with the environment. But there’s another thing they value more: price. More than 75% of Gen Z believe that the price of the car is the most important aspect of their purchasing decision; compared to 70% among millennials when they were of the same age. In fact, Gen Z definitely seems like a more down-to-earth generation; studies show that most of them would buy an electric car more to save money on gas than to save the planet from global warming. Above all else though, safety comes first: Gen Z values it more than millennials and baby boomers combined.
When it comes to specific brands, Generation Z doesn’t have much of a bias; though Honda, Chevrolet and Ford are still the most preferred solely based on their stellar traditional reputations.
If you read the paragraph above and surmised that owning a car is a big deal for Generation Z; you’ll be even more impressed with their homeowning aspirations. In other words, while most members of this demographic aren’t even old enough to rent a home; many of them aspire to own one in the future.
A little more than half of Generation Z people would rather save up to buy a home than rent one. And we are talking about young adults who are just starting out in the world of business and their careers. However, the abundance of new, Internet-related job opportunities makes this aspiration relatively realistic. Many of them work as freelancers, handling their own clients without having a traditional desk job in a company.
Remember, this is the first generation that was practically born into the world of high-tech; so they know their way around any kind of “computer-esque” device or software. Considering that, it’s no wonder that they’re able to find homes for rent faster than most other people. They also submit the most applications for rental homes compared to all other generational cohorts.
It’s important to remember that, as many of the Generation Z people want to have and own things; in reality, at least for now, they don’t really have that much. A very large portion of this demographic have not even finished high school as of 2020, so their preferences are much more of a wish-list than a concrete set of goals.
But even though a majority of this generation does not yet live by themselves; they still have a surprisingly large level of influence over the budgets of their households. In fact, most Generation Z parents admit that their kids exert a huge practical influence over how the family spends its collective money; more so than the millennials had on their parents.
In conclusion, it’s pretty easy for many sociologists and other experts to dismiss Generation Z as not influential at the moment; especially since they are still so young. But most of these experts are forgetting that millennials used to be treated with the same contempt by their elders. And while young, there are clear signs that Generation Z members are set to have a deciding role in the global society in the next few decades. For instance, they will make up as much as a quarter of the US population in 2020. Considering such a demographic shift, exploring this generation’s financial habits further is imperative.
Published by Debt.com, LLC