For years, Millennials have been the poster children for student debt and avocado-on-toast spending. But is a new generation, Gen Z, about to rewrite the rules of personal finance? Here in New Zealand, we're seeing a fascinating shift in how young people approach their money, from savvy investing in KiwiSaver and shares to embracing budgeting apps and prioritising financial security. Let's dive into a comparison of Gen Z and Millennial financial behaviour, exploring whether the younger generation is truly more financially responsible, or if it's just a different approach.

The Millennial Landscape: A Generation Shaped by Economic Challenges

Many Millennials entered adulthood during the Global Financial Crisis, a period marked by economic uncertainty and rising living costs. This generation often carries significant student loan debt, faces challenges in homeownership, and has been accused of prioritising experiences over long-term savings. While the 'avocado toast' stereotype is often used to mock their spending habits, it's important to acknowledge the systemic factors that have impacted their financial situation. The housing market in New Zealand, in particular, has made it incredibly difficult for Millennials to get on the property ladder.

Gen Z: Digital Natives with a Financial Focus

Growing up in a digital world, Gen Z has access to a wealth of financial information and tools. They're more likely to be financially literate, thanks to online resources, budgeting apps, and social media influencers who promote financial education. A key difference is their awareness of the importance of early investing. Many Gen Z individuals are actively participating in KiwiSaver, researching investment options, and even dabbling in the share market - often through platforms that make investing more accessible. They’re also more conscious of debt and are generally more cautious about taking on loans than their Millennial counterparts.

Key Differences in Financial Behaviour:

• Investing: Gen Z seems to be embracing investing earlier and more enthusiastically, leveraging technology and readily available information.
• Budgeting: Budgeting apps and financial tracking tools are far more prevalent among Gen Z, allowing for greater control over spending.
• Debt Aversion: While student loan debt remains a concern, Gen Z appears to be more cautious about accumulating other forms of debt.
• Financial Literacy: Access to online resources has contributed to a higher level of financial literacy among Gen Z.
• Long-Term Planning: Gen Z demonstrates a stronger focus on long-term financial goals, such as retirement savings and homeownership (though the latter remains a significant challenge in New Zealand).

Why the Shift?

Several factors contribute to the changing financial landscape. The rise of social media has exposed Gen Z to a wider range of financial perspectives and strategies. The gig economy has also fostered a greater need for financial independence and self-reliance. Furthermore, witnessing the financial struggles of their Millennial elders may have instilled a greater appreciation for financial security.

The Kiwi Context: Challenges and Opportunities

While Gen Z's financial savvy is encouraging, they still face significant challenges in New Zealand. The high cost of living, particularly housing, remains a major hurdle. However, their proactive approach to saving and investing, combined with readily available financial tools, positions them well to navigate these challenges and build a more secure financial future. It's crucial for financial institutions and educators to continue supporting Gen Z's financial literacy and providing access to affordable financial products and services.

Ultimately, it's not about declaring one generation 'better' than the other. Both Millennials and Gen Z face unique financial challenges. However, the early signs suggest that Gen Z's digital fluency and proactive approach to financial planning could lead to a more financially secure future for this generation – and potentially inspire Millennials to reassess their own financial strategies.