Generation Z, born after 1995, is the first generation to grow up with computers, smartphones, and the Internet. While Millennials have been in the spotlight for a while, the oldest of Gen Z are now reaching college age. Understanding how they think about money and their financial literacy is crucial for banks looking to connect with them in the future.

The recession, the housing market crash, and witnessing Millennials struggle with student loans and other debts have shaped Gen Z’s financial habits. A study by Raddon found that two-thirds of a group of 2,500 teens had already opened a bank account and were up to three times more likely to have taken a financial education class than Millennials. Although they may be more financially savvy, many still face stress related to college savings, getting a job, renting an apartment, buying a home, and paying off debt after college.

1. Money Management Skills

Most Gen Z individuals care about financial literacy, but 84% rely on parents and family for financial advice. This is challenging because many parents grew up with different financial information and less sophisticated options for savings, retirement, mortgages, and loans.

With the rise of self-service, automation, and always-available digital banking, the landscape has changed dramatically. Many banks no longer offer in-depth support for retirement and 401(k) planning, meaning Gen Z will have to make more financial decisions than their parents did. Basic financial literacy programs covering money management, investing, mortgages, and renting will help Gen Z make better financial decisions.

2. Debt Is a Major Concern

Growing up watching Millennials struggle with student loans and debt has made Gen Z wary of taking on debt. While this caution can be good, it’s important for Gen Z to build credit and manage small, manageable debts to qualify for mortgages and larger loans later in life.

Financial literacy programs should teach smart debt management and how to build credit. Many Gen Z individuals already know that too much debt is bad, but they may not understand how credit history works. Comprehensive training on credit reports and scores can help address this gap.

3. Self-Sufficiency in Money Management

Gen Z are digital natives who use apps and calculators for almost everything. While self-sufficiency is valuable, it’s also important to seek personalized assistance. Explaining how financial help can lead to better loans, bank accounts, and options may increase engagement with your bank. It will also help Gen Z understand when self-service is appropriate and when it’s not.

4. Developing a Gen Z Financial Literacy Program

Generation Z ranges from college students to those just over 10 years old, requiring different levels of support. Connecting early, ideally in high school or sooner, is key to building the financial literacy they need to make good decisions when they become financially independent.

For example, many Gen Z students need budgeting skills to manage their money. Moving into college often means using credit cards, and budgeting is crucial for avoiding unnecessary debt. Financial education should cover:

– Day-to-day budgeting

– Credit and credit history

– Saving and planning for college debt

– Getting a job and managing money

– Renting a home

– Buying a home

– Mortgages

– Investing in vehicles and other large purchases

– Responsible credit habits, such as paying bills on time

Why Gen Z Financial Literacy Programs Are Important

Generation Z is set to become the largest generation with more buying power than Millennials and Baby Boomers combined. With poor financial information, rapidly changing financial rules, and a shift in financial services, Gen Z needs to know more than any other generation. Providing basic financial literacy through digital courses or school platforms will allow your bank to reach Gen Z when they need it most, right before they take on financial responsibility.

Programs should be relevant, focusing on short and mid-term financial issues like saving for college, budgeting, managing credit cards, renting, and possibly buying a home. While long-term goals like saving for retirement or investing can be covered, most Gen Z individuals may not be interested yet.

Connecting with Generation Z through financial literacy programs will help build a relationship with the next generation of consumers.