Building on its Better Money Habits Gen Z 2021 research on Gen Z consumers, Bank of America conducted a survey to dig deeper into this generation’s (18-25 year old) distinct approach to money, financial priorities , behaviors and challenges.
Generation Z being more diverse than previous generations, the new research has examined the ways in which race, ethnicity and gender can influence their financial goals and challenges.
Black/African American Gen Z
Black/African American Generation Z are leading the way to financial independence, embracing a culture of restlessness to achieve their goals. Sixty percent of Black/African American Gen Zers identify as being mostly or totally financially independent, more than their non-Black/African American peers (45%), according to the survey. They are more likely to consider taking a second job (35% vs. 25%) and prioritize starting or growing a business (15% vs. 5%), compared to non-Black Gen Z /Afro-American.
Despite improving from last year’s survey, debt continues to be an issue for Black/African American Generation Z, with 30% citing having had too many student loans 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 cite the hope of passing on wealth to the next generation (36% vs. 27%) and the desire to succeed financially to make their parents proud (36% vs. 23%) as primary motivators at higher rates than non-Hispanic Gen Z
More than half of Hispanic Gen Z are not financially independent and still depend on family for financial support; 65% say their parents didn’t talk openly about finances when they were growing up. Education gaps remain a barrier for Hispanic Gen Z when it comes to investing: 42% have no investment, and when asked why, the top reason is not knowing for sure. where to start (42% vs. 27% of non-Hispanic Generation Z).
Gen Z women
Gen Z women show gaps in financial literacy and lack of investment compared to men, according to the survey. Thirty-eight percent of Gen Z women have enough emergency savings to last three months, compared to 48% of Gen Z men. They report feeling less equipped than men to save for retirement and invest , and fewer Gen Z women have started or are considering individual investments or retirement savings vehicles, such as a 401(k) plan.
Reaching all Gen Z consumers
While 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 often mentioned site used for financial information. in 2019 and remains at the top in 2022. Its share of these users has grown from 53% to 64% over the past three years, LIMRA added.
YouTube usage has also seen strong growth among Gen Z, rising from a 32% share in 2019 to 58% in 2022, according to a LIMRA study. This trend may continue as Gen Zers prefer the video platform.
Instagram was not part of the survey in 2019 and now has a 38% audience share. Twitter is another example of a site that was not included in 2019, but now has a significant share (26%) of that audience. Nearly a quarter of those users cite TikTok, with its shortened video capabilities. Together, these sites reflect the dynamic rate at which the social media space is changing and why tracking these trends is so important to the industry.
“The industry needs to focus on engaging with millennials and Gen Z where they are,” said Steve Wood, research director, Consumer Markets Research at LIMRA. “This involves a greater focus on digital and social media, virtual forums, such as Zoom and WebEx, and streamlined business processes like automated underwriting.”
Ayo Mseka has over 30 years of experience reporting on the financial services industry. She was previously editor of NAIFA’s Advisor Today magazine. Contact her at [email protected].
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