As a follow-up to its Better Money Habits Gen Z 2021 research on Gen Z consumers, Bank of America conducted a survey to do a deeper dive into this generation’s (ages 18-25) distinct approach to money, their financial priorities, behaviors and challenges.
With Gen Z being more diverse than previous generations, the new research examined ways in which race, ethnicity and gender may influence their financial goals and challenges.
Black/African American Gen Z
Black/African American Gen Z is paving the way toward financial independence, embracing a hustle culture to achieve their goals. Sixty percent of Black/African American Gen Z identify as mostly or fully financially independent, more so than their non-Black/African American peers (45%), the survey said. They are more likely to consider taking on a second job (35% vs. 25%) and prioritize starting or growing a business (15% vs. 5%), compared to non-Black/African American Gen Z.
Although it has improved from last year’s survey, debt continues to be an issue for Black/African American Gen Z, with 30% citing taking on too much student loan and/or credit card debt as their biggest financial regret.
Hispanic Gen Z
Hispanic Gen Z is driven by family considerations when evaluating their finances. They state a hope to pass down wealth to the next generation (36% vs. 27%) and a desire to succeed financially to make their parents proud (36% vs. 23%) as key motivators at higher rates than non-Hispanic Gen Z.
Over half of Hispanic Gen Z is not financially independent and still relies on family for financial support; 65% say their parents did not talk about finances openly when they were growing up. Education gaps remain a barrier for Hispanic Gen Z when it comes to investing: 42% don’t have any investments, and when asked why, the top reason is not knowing where to start (42% vs. 27% of non-Hispanic Gen Z).
Gen Z women
Gen Z women display financial literacy gaps and a lack of investing, relative to men, according to the survey. Thirty-eight percent of Gen Z women have enough emergency savings to last for three months, compared to 48% of Gen Z men. They report feeling less equipped than men to save for retirement and to invest, and fewer Gen Z women have begun, or are considering individual investments or retirement savings vehicles, such as a 401(k) plan.
Reaching all Gen Z consumers
As agents and advisors try to work with all types of Gen Z consumers, LIMRA research shows that when it comes to reaching them, Facebook was the most commonly mentioned site used for financial information in 2019 and remains on top in 2022. Its share of these users increased from 53% to 64% in the last three years, LIMRA added.
YouTube usage also experienced strong growth among Gen Z, moving from a 32% share in 2019, to 58% in 2022, according to LIMRA research. This trend may continue as members of Gen Z prefer the video platform.
Instagram was not part of the survey in 2019, and now holds an audience share of 38%. Twitter is another example of a site that was not included in 2019, but now has a significant share (26%) of this audience. Almost a quarter of these users cite TikTok, with its short-form video capabilities. Together, these sites reflect the dynamic pace at which the social media space changes and why monitoring these trends is so important to the industry.
“The industry needs to focus on engaging with the millennials and Gen Z where they are,” said Steve Wood, research director, Consumer Markets Research at LIMRA. “This implies much more focus on digital and social media, virtual forums, such as Zoom and WebEx, and streamlined business processes like automated underwriting.”
Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at [email protected].