Context

Yorkshire Building Society provides an online financial education programme for 11-19 year olds, Money Minds. Over the course of three years they have published a series of research reports on public financial wellbeing.

Generation Z, or Gen Z, refers to people born between 1997 and 2012, and who were aged 16-27 at the time of this research. While some media commentary has been critical of this generation, the wider population has a great deal of sympathy for the financial challenges facing Gen Z. In particular, their early experiences of managing money have occurred in the context of the Covid-19 pandemic, a cost-of-living crisis, high housing costs and persistently low economic growth.

The study

Recognising the challenges facing Gen Z, Yorkshire Building Society commissioned Public First to undertake this study. It explores the nuanced financial behaviours of Gen Z, many of whom were likely to be experiencing financial responsibilities for the first time, and how this group – and the general population – view their financial situation.

The study provides a quantitative analysis of survey data from two types of sources. First, new data were collected in a UK-wide survey run by Opinium in May 2024, achieving a sample of 1,000 people aged 16-27 (Gen Z) and a sample of 2,000 nationally representative adults.

Second, data from major, large-scale nationally representative surveys were obtained, including the Wealth and Assets Survey (Office for National Statistics), the Financial Lives Survey (Financial Conduct Authority) and the Survey of Household Finances (Bank of England/NMG).

Key findings

Gen Z were under significant financial pressures

• 68% had felt very or somewhat stressed about their financial situation over the previous 12 months.
• 31% said that if their monthly outgoings went up by £100 they would be unable to afford them.
• 36% checked their current account every day.

Gen Z were struggling to save effectively

• 52% had not saved any of their income over the previous two years and three-quarters of those who weren’t saving said this was due to a lack of income or high debts.
• 1.4m did not shop around for the best interest rates for their savings.
• 400,000 more reluctant savers could have saved a £5,000 mortgage deposit in the following five years had they been encouraged to do.

Gen Z were at risk of poor financial decision making and wanted to manage their money better

• 39% said they lacked the knowledge to make key financial decisions.
• Compared with other generations, their propensity to say they felt knowledgeable was at the low end of the range for every financial concept tested except student loans.
• 53% said they did not know how to create a budget and stick to it.
• 20% said they had used Buy Now Pay Later services within the last year.
• 46% of those who had received financial education at school agreed that it had made their finances better.
• 43% said they sought out financial education resources.

The report makes recommendations based on the research which relate to:

• improving financial education in schools
• targeting financial information at Gen Z better
• developing products that are more appropriate for them.

Points to consider

Methodological strengths or limitations

• The report is scant on the methodological details of the Opinium survey. This makes it is difficult to assess the reliability and robustness of the findings.
• 1,000 Gen Z cases is a comparatively small sample size for a national survey, no margin of error was given, and point estimates should be interpreted with caution.
• Use of secondary data from the major, national financial surveys of individuals and households confers reliability. However, no details are given to assess the rigorousness of the analysis of these sources, and they are likely to relate to years earlier than 2024.
• While differences between Gen Z and general population findings are highlighted in the report, no reference is made in the report to the statistical significance testing of these.
• The report does not seek to disentangle generational differences from ageing effects. As such, it provides only a contemporary snapshot of differences across the generations.

Applicability

• The report should be of interest to policymakers and practitioners who seek to support the financial wellbeing of today’s generation of young adults, and who wish to understand the particular challenges they face.
• The study should also be of interest to financial services providers who may be able to effect change which supports the particular needs of today’s young adults better.

Relevance

• The report is timely, and relevant given some of the particular challenges which young adults in Gen Z have faced which are likely to have impacted their financial capability and financial wellbeing directly or indirectly.