College is Top Concern of “Generation Z”

Photo credit: Arvind Balaraman

How to fund a college education and pay off student loans are the chief concerns of four in ten young people today, new research reveals.

of Life Health Pro  highlights a  TD Ameritrade Holding Corporation, (NYSE:AMTD) online survey of 2,001 U.S residents, including 1,001 youths born between 1990 and 1999 – ; and 1,000 of their parents.

“Generation Z” refers to people ages 13 to 22.

According to the study, their chief financial concerns and priorities are:

  • Affording college (39%).
  • Having a large student loan balance (39%).
  • 76% say that saving money is important.
  • 41% say they have a budget and follow it closely.

When asked what they would do with an extra $500, 55% of Gen Z respondents say they would save the month; 11% say would save the money for college.
Regarding Gen Z parents:

  • 58% of Gen Z’s parents say they had taken out their own student loans.
  • 43% are still paying the loans back.
  • 51% who are still paying back college loans also have a 529 college savings plan to support their child’s education.
Common concerns of Gen Z youths and their parents:
  • 25% of Gen Z youths and their parents share a concern about jobs and unemployment.

Warning Signs

The survey also finds evidence that Gen Z is “showing signs of developing early bad financial habits.”

  • 56% of Gen Z respondents who have a credit card, carried a balance for 6 months or longer.
  • Only 23% pay off the balance each month.
  • 23% of 19-to-22 year olds do not have either a checking or savings account.
  • 41% of 16-to-18 year olds do not have either a checking or savings account.

Practice Makes Perfect

Gen Z respondents who had experience with more financial products were found to be better budgeters. Good Gen Z budgeters:

  • Average $850 more in savings than those who didn’t budget as well.
  • Have “extensive discussions” with their parents about saving money (67%.)
  • Only 34% of those who aren’t good budgeters had such discussions.

An Emerging Market for Financial Services?

Marketers of all kinds of products can benefit from the spending and online habits that characterise Generation Z, according to Euromonitor. According to Gina Westbrook, Euromonitor International’s editorial director:

Gen Zers were born into the digital world and do not know a time without the Internet, laptops, graphic video games and mobile phones. Using such devices is second-nature to them and they are accustomed to processing huge amounts of bite-size information at high speed. Equipped with generous incomes that are almost entirely discretionary, manufacturers that invest heavily in brand-building marketing programmes, particularly online, are likely to capture sales from this consumer group.

Euromonitor’s briefing details Generation Z profiles in Western and emerging markets worldwide, including behavioural traits, income and purchasing power, and connects that information to future marketing opportunities for brand managers and manufacturers targeting teens and tweens. A full description and table of contents for the briefing can be found on Euromonitor International’s website.

Engaging Gen Z – The “Digital Natives”

To understand Generation Z or the Internet Connected Generation, let’s first review a few basic traits of Gen Y.
Gen Y: One of the most accomplished generations with respect to professionalism, dynamism, knowledge and perspicacity, Gen Y is ethnically and racially diverse. They believe in commitment to a brand until something extremely negative occurs. They believe in leading their life their way, but ensuring that it is in line with the family / corporate values and norms. They are involved with their communities and in other social development passions. Education plays a very important role in their life. At the workplace, they believe in achieving targets as a team, in sharing ‘Best Practices.’
  • Gen Z is full of competition – an attribute Gen Y parents is creating in them, along with a sense of individualism. To ensure teamwork, managers of Gen Z may have to put in lots of extra innovative effort as they will do anything to stick to their identity. HandleWith Care.
  • Digital Natives: Since they were born in the era where they were surrounded with their parents’ smart phones, tablets, LCD’s, etc. they are unbeatable at technical expertise and therefore called ‘Digital Natives’. Once they hit the corporate world, and become mass consumers, everything for them will need to be digitized. Be prepared for super-fast communication. Their cognitive ability will be at lightning speed. At every step they will challenge the status quo and will start putting a question mark on the traditional ways of working by labeling them as archaic. Gen Z is ‘plugged in’ 24 x 7 and they breathe technology. Multitasking for them is natural. They must be kept stimulated at all times to influence.
  • Z-yer’s believe in experiential learning. You cannot just make a claim, but will need give them valid reasons, quoting instances. Give them logic for all that needs to be done.
  • Cutting edge employee benefit programs will be needed to retain them as employees. What was a new development a year back, is now basic necessity. Companies will have to attract them not only monetarily, but also through innovative employee benefits and engagement strategies.
  • Beyond Brand Loyalty: They want to go beyond engagement into conversations, expecting to be heard and demanding more from brands than any generation to date. They are not brand loyal as Gen Y but have high expectations of product satisfaction. They are keen to find and share the best products around.