For Gen Z in Australia, understanding finances is challenging. This blog explains its importance and offers steps for financial security.
In the fast-paced and ever-changing landscape of today’s world, financial literacy is crucial for every generation. However, for Generation Z in Australia, understanding personal finances and achieving financial security is becoming increasingly challenging.
This blog aims to delve into the rationale for financial education among Gen Zs in Australia and provide actionable steps to help them embark on a secure financial track.
Gen Z Financial Education
Economic Uncertainty
The current economic climate is characterised by uncertainty and volatility. Gen Zs are facing the consequences of global financial events, such as economic downturns, inflation, and rising living costs. Without a solid financial education, they may struggle to navigate these challenges effectively.
To illustrate, a March 2023 report from Finder carried over the Australian Financial Review noted that the rise in cost of living tagged 56 per cent of Gen Z respondents as having been pressured to find a second job to have more money. A 21-year-old startup founder from Melbourne interviewed for the Fin was even forced to cancel two VOD subscriptions and stop UberEats deliveries to cover an $800 monthly rental on a Frankston house where he used to spend over $1k on a place in Ascot Vale.
Debt Burden
Many Gen Zs are burdened with significant student loan debts, credit card debts, and other financial obligations. A November 2023 analysis from ASIC revealed that Gen Zers’ average personal debts were tagged at $8,188 against $6,730 for older demographics, four per cent of Australia’s Gen Z population are at least $50k in debt, and 25 per cent have savings accounts with no more than $1,000 in balances.
Longevity of Financial Decisions
Gen Zs have a long future ahead of them. The financial decisions they make today can have far-reaching consequences on their financial health in the future. Proper financial education empowers them to make informed choices that will positively impact their lives in the long run.
Shifting Landscape
The financial landscape is continually evolving, with the rise of digital currencies, new investment opportunities, and alternative financial services. Gen Zs need to stay informed to make the most of these developments while avoiding potential pitfalls.
Retirement Planning
Despite being at the early stages of their careers, planning for retirement should not be overlooked by Gen Zs. Starting early and understanding the benefits of compounding can significantly improve their financial security in later years.
One critical element of this is imparting the need for awareness of superannuation in Gen Zs. Data compiled by the Australian Retirement Trust revealed that 29 per cent of Gen Z respondents do not know the current SG rate, but another 47 per cent want to determine how they can contribute more to their supers.
In discussions with News Corp Australia’s Mary Madigan, Finder money expert Sarah Megginson said Gen Zers are not of the same financial mindset as their elders, preferring to look after their mental health instead of working harder to earn as much money as possible. Money Magazine’s Tom Watson looked over the results of Aware Super’s July 2023 study, which revealed that in the 16-34 age demographic, 31 per cent are looking to retire by the time they reach 55 years old and 29 per cent claim they can have a comfortable retirement at that age for under $500k. However, the Aware Super team estimates single people can possibly have a comfortable retirement by age 67 if their super finances are at least $545k.
Entrepreneurial Opportunities
Gen Zs are known for their entrepreneurial spirit. A sound financial education can help them manage finances in their business ventures, increasing the likelihood of success.
Getting Gen Zs on a Secure Financial Track
Financial Literacy Hardcoded into the Education System
To ensure that financial education reaches every Gen Z individual, it is crucial to incorporate financial literacy programmes into the education system. These programmes should cover topics like budgeting, saving, investing, debt management, and understanding financial products. A Findex study from 2021 stated that 48 per cent of Australians between 15 to 25 years old admit they couldn’t remember much of whether their schools had any financial literacy subjects.
Interactive Workshops and Seminars
Organising interactive workshops and seminars on financial literacy can engage Gen Zs and make learning about finances enjoyable. Local communities, educational institutions, and financial institutions can collaborate to host such events.
Digital Tools
Given Gen Z’s affinity for technology, using mobile apps and online platforms that offer financial education and budgeting tools can make a significant impact. These interactive tools can help them track expenses, set financial goals, and understand their financial health.
Encouraging Parental Involvement
Parents play a crucial role in shaping their children’s financial behaviours. Encouraging parents to talk openly about money matters with their children and lead by example will reinforce the importance of financial responsibility. The above Findex study stated that 71 per cent of Australians between 15 to 25 years old say they still consult their parents or guardians for financial advice.
Mentorship Programmes
Establishing mentorship programmes connecting Gen Zs with financially savvy individuals can offer valuable guidance and support. Mentors can share their experiences, provide insights, and offer personalised advice to help Gen Zs make informed financial decisions.
Gamification of Financial Learning
Gamifying financial education can make the learning process enjoyable and effective. Developing financial literacy games or incorporating financial elements into popular games can boost engagement and knowledge retention. One example of a game that aims to teach about financial literacy is Celebrity Calamity; made by a non-profit organisation, the game puts players as business managers of a certain B-list celebrity. The objective is to rein in the person’s wanton spending while still keeping them satisfied and their career on track. Female testers claimed that upon running the game, between 15 to 30 per cent claimed more confidence with financial management.
Building Credit Awareness
Gen Zs should be educated about the significance of building and maintaining a healthy credit score. Understanding credit and its implications will aid them in accessing financial opportunities in the future.
Conclusion
Some older people may be looking at the younger set and shake heads at how carefree they are with finances. As we navigate the dynamic financial landscape in 2024, it is evident that financial education is indispensable for the well-being of Aussie Generation Zs. By equipping them with the knowledge and tools necessary to make informed financial decisions, we can empower Gen Zs to achieve financial security and lay a solid foundation for their future.
DISCLAIMER: This article is for informational purposes only and does not constitute official financial advice. 2 Ezi is not affiliated with any company or organisation mentioned in this article. Please consult a financial advisor for personalised solutions.
