Jack Han reports on Generation Z’s saving dilemmas.
December 1, 2009
Generation Z have started to worry about their own financial future, with most opening savings accounts to prepare for expenses that they will face in adulthood, according to a new report. This has drawn a surprising contrast with Generation Y, whose savings history is riddled with debts.
Credit file bureau Veda Advantage and teen researcher Habbo, found that one in five teenagers are saving for a deposit on their future home so that they would not have to rely on handouts from their parents or the government, unlike Generation X and Y.
Researchers interviewing 2000 teenagers between the ages of 12 and 18 have uncovered a worrying trend of ‘money stress’, which is causing children to stash their pocket money for future big buys such as a home, an education, or a car.
The report revealed that nearly 70 percent worried about their finances, with two-thirds (64 percent) using a savings account to protect their financial future.
"…Generation Z is more grounded and traditional in their value system than Generation Y,” Jeff Brookes, Regional Director, Asia Pacific at Habbo, said.
Teenagers have prioritised goals of car and home ownership and investing in their education above travel plans, which was the popular choice for Generation Y, according to the report.
Compared to Gen Y (19 to 30 years of age), who are responsible for 37 percent of Australia’s consumer credit defaults, Gen Z is shaping up to be one of the most responsible generations of savers.
The only thing is that Gen Z lacks is the financial knowledge and experience of their older counterparts, but many are starting to use the internet as a way of learning and comparing financial products.
For example, a quick online comparison can mean the difference between mediocre returns of 3 or 4 percent p.a. and high interest accounts of over 5 percent p.a. This can help gain extra thousands of dollars over the term of their savings plan.
Because many Gen Z savers don’t plan to purchase a home for another 10 years, they have plenty of time to grow their savings. For example, to save up for a 10 percent deposit ($27,500) on a $275,000 loan in 10 years, you would only need to save about $44 a week on a 5 percent p.a. interest rate.
It is never too early to begin saving for your future needs, and Generation Z has already got the right attitude. All you need is the tools, so start shopping for the best savings accounts today and your financial success.