These are the biggest financial gaps among Gen Z
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According to a recent Sage report, Gen Z has the lowest level of financial literacy, with only 28% of questions being answered correctly when asked about finances.
Navigating finances and insurance has become increasingly complex for young adults, and whilst financial literacy is taught in schools today, the majority of Gen Z are entering the adult world without enough guidance. Speaking to 5 Gen Z people, life insurance broker, Reassured, find that many find themselves learning through trial and error, often at a considerable cost.
Gen-Z are falling victim to extra charges due to financial illiteracy.
Brook, 26 from Leeds, fell victim to additional charges on his credit card when he was 21, stating, “Often, I would receive late payment charges on my credit card and letters from buy-now-pay-later sites, such as Klarna. My credit limit on my card was a concerning £700. The app would promote me to pay a small portion each month as a recommended payment, this equated to around £40 per month off a £700 balance.”
Brook stresses that he wishes ’d learnt about credit scores before he turned 18, as for many years he had to rectify the mistakes he made when he was younger, which he claims, “Could have been avoided with education in school.”
Gen Z don’t know how to effectively save for the future.
The rising cost of living and inflation have made it more difficult to pursue long-term financial goals, say Gen Z. Jess, 23 from Manchester, has expressed how she worries about her future because she feels unaware of the cost of most large expenses, such as house deposits. Jess states, “I worry all the time as I don’t know how much to budget with everything rising in cost all the time. It’s hard to understand economics in the news and how it will affect me. I’m so unaware of the smartest way to make my money work well for me.”
Gen Z are savvy savers, however having spoken to several young people, it’s apparent that’s not the case when it comes to saving for a house deposit and it’s something that worries many.
Emma, 25 from Harrogate, comments that saving for a house deposit is her biggest financial worry. “I do have a help to buy ISA but that’s just because someone suggested it to me. I am very unaware of how it actually works, why it benefits me and how much I should be adding in each month.”
Gen Z don’t know how to invest.
Many believe that education around finances should start at an early age. However, young people think they didn’t receive enough education about finances in school. Chloe, 23 from Belfast, reflects on her own education, stating, “I received no financial education whatsoever during school. I have no idea about investing and pensions which is something I should’ve been taught before going into the working world.”
Max, 25 from Leicester, also believes he didn’t receive enough financial education in school, adding, “I wasn’t taught much in school at all, I wish I’d learnt more about taxes and renting before becoming an adult and having to learn for myself.”
Gen Z don’t know how to future-proof their finances.
There are many ways to protect your finances that a lot of young people fall short at. Emma, 25 from Harrogate, wishes she knew more about income protection insurance. “I just assume my employer has my best interests at heart when it comes to my income and how it is affected by sickness, etc, but I was unaware of income protection and how it could protect me should I fall sick for a prolonged period of time until last week at the age of 25.”
Phil Jeynes, Director of Corporate Strategy at Reassured, comments, stating that young people must focus on financial protection as a starting point. “Protecting your finances is a really important consideration and something a lot of people think they only need to worry about when they have a mortgage and a family. In reality, even young people with no dependants should consider the impact of losing their income due to illness or injury. Income Protection is a simple product which will be very affordable for most and means you won’t have to rely on hard won savings or family if you’re unable to work. The main thing is to consider Protection before you need it, just like other insurances – you can’t insure your car after the crash!”
