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30 July 2015 - A surprisingly high number of working 18 – 23 year olds (the Z Generation) are adopting a responsible approach to money management, indicates the 2015 Old Mutual Savings & Investment Monitor, launched today.
The Monitor, which tracks the shifts in the financial attitudes and behaviour of South Africa’s working metropolitan population, found that 77% of Z Generation respondents would use a bonus of R10 000 to pay off debt (28%) or make either short term (33%) or long term investments (16%).
“A further 14% said they would spend it, and the majority of them confirm that they enjoy and gain confidence from expensive, branded material possessions,” says Old Mutual Researcher Manager, Lynette Nicholson.
“Although most have not yet committed to formal savings, believing they are still too young or don’t earn enough, 34% already belong to a pension or provident fund, and 21% have invested in Retirement Annuities. About 28% have a funeral policy, 26% have banked cash savings, 25% have risk protection and 12% own unit trusts.”
In this respect, South Africa’s Z Generation follows the global trend. A study conducted in June 2015 by US-based T Rowe Price found that Z Generation generally practices good financial habits.
Our Z Generation’s average income is R8900 per month and although there is low satisfaction with their current financial state, 85% are optimistic about the future.
Ms. Nicholson adds: “Most acquired their financial knowledge from their parents and friends, but only 40% feel their knowledge is adequate and only 41% says they are managing their finances well. This highlights the ongoing need for expert financial education and professional financial advice to this generation.”
What’s not surprising is that electronic and digital products loom large among their purchasing priorities, and being able to afford these is what motivates 84% of those who are saving. Saving for home appliances and furniture are their second saving priorities (at 63%), with saving for a car in third place (43%).
A resounding 95% are comfortable using digital devices and 84% like using the most technologically advanced products available. About 72% prefer doing as many transactions online as possible.
Ms Nicholson believes that “the emergence of this generation’s financially pragmatic outlook combined with their openness to change and new learnings augurs well for the future.”